As per case facts, Amazon acquired an equity interest in Future Coupons Private Limited (FCPL), an entity within the Future Group. This transaction, along with related arrangements concerning Future Retail ...
No Acts & Articles mentioned in this case
2026 INSC 576 C.A. NO.4974 OF 2022 Page 1 of 154
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.4974 OF 2022
AMAZON.COM NV INVESTMENT
HOLDINGS LLC …APPELLANT(S)
VERSUS
COMPETITION COMMISSION OF
INDIA & ORS …RESPONDENT(S)
J U D G M E N T
VIKRAM NATH, J.
A. INTRODUCTION
1. Merger control under the Competition Act, 2002
1 is a
forward-looking instrument of economic regulation. Its
objective is to preserve competitive markets in India by
ensuring that combinations which may alter market
structure are examined before they take effect. This
statutory design necessarily rests on disclosure. The
notice in respect of a proposed combination must present
the transaction as it is intended to operate in substance,
including its structure, its inter-connected steps, and the
rights and arrangements that give it commercial meaning,
so that the Commission is placed in a position to
1
In short “the Act”
C.A. NO.4974 OF 2022 Page 2 of 154
undertake an informed assessment of likely competitive
effects. The law, therefore, insists on substance and
requires that the regulator be enabled to examine the
transaction as a composite whole.
2. At the same time, the Commission is a creature of statute.
Its authority, whether to impose penalties, to draw adverse
inferences from alleged non-disclosure, or to disturb an
approval already granted, must be traced to the Act and
exercised within the limits that the legislature has set.
Where the statute requires satisfaction of particular
ingredients, including materiality and the prescribed
mental element, those requirements cannot be diluted by
general observations about candour. Where the statute
prescribes time-bound finality and mandates fair notice
and hearing, those safeguards are not procedural niceties
but are substantive constraints on the power of the
Commission. A merger control regime that is rigorous yet
law-governed best serves the public interest. It protects
and promotes competition in India by maintaining
predictability, fairness, and confidence in the
administration of economic law.
3. The present Civil Appeal, filed under Section 53T of the
Competition Act, 2002, assails the judgment and final
order dated 13.06.2022 passed by the National Company
Law Appellate Tribunal, Principal Bench, New Delhi
2, in
Competition Appeal (AT) No. 01 of 2022.
2
In short “NCLAT”
C.A. NO.4974 OF 2022 Page 3 of 154
4. By the impugned judgment, the NCLAT affirmed, in
substantial part, the order dated 17.12.2021 passed by
the Competition Commission of India
3 in proceedings
initiated against Amazon.com NV Investment Holdings
LLC
4 under Sections 43A, 44 and 45 of the Act, arising out
of a show cause notice dated 04.06.2021.
5. The order dated 17.12.2021, inter alia, kept in abeyance
the approval order dated 28.11.2019 issued by the CCI
under Section 31(1) of the Act in Combination Registration
No. C-2019/09/688, directed Amazon to submit a fresh
notice in Form II under the Combination Regulations, and
imposed monetary penalties.
6. The NCLAT affirmed the CCI’s principal conclusions and
consequential directions, including the direction keeping
the earlier approval in abeyance and the direction to file a
fresh notice in Form II, while interfering only to the limited
extent of modifying the penalties imposed under Sections
44 and 45 of the Act.
7. The controversy before this Court concerns, in substance,
the scope of the notification and disclosure obligations in
merger control under the Act and the Competition
Commission of India (Procedure in regard to the
transaction of business relating to combi nations)
Regulations, 2011
5, the statutory limits of the CCI's
powers after an approval under Section 31(1) of the Act,
3
In short “the CCI”
4
In short “Amazon”
5
In short “the Combination Regulations”
C.A. NO.4974 OF 2022 Page 4 of 154
and the legality of the consequences imposed in the
present case.
8. We have heard learned counsel for the parties and have
perused the material placed on record.
B. Primer on the relevant principles for the present
dispute
9. Before turning to the facts and the rival submissions, it is
appropriate to set out the principal statutory concepts and
terms which arise in merger control under the Act and the
Combination Regulations. The purpose of this Primer is
purely explanatory. It is meant to enable the reader to
follow the later discussion on disclosure duties, the CCI’s
inquiry, and the legality of the consequences imposed. At
the outset, it is necessary to clarify the legal framework
applicable to the present dispute. The notice under
Section 6(2) of the Act was filed on 23.09.2019. The CCI
granted approval under Section 31(1) of the Act on
28.11.2019, the show cause notice was issued on
04.06.2021, and the impugned order was passed on
17.12.2021. The rights, obligations, and limits of power
that fall for determination in this appeal must therefore be
tested on the basis of the Act and the Combination
Regulations as they stood during that relevant period. To
the extent statutory provisions or regulations have been
amended thereafter, including by subsequent legislative
changes, such later amendments cannot govern the
legality of the actions taken or the consequences imposed
in respect of the events in question. Where reference is
C.A. NO.4974 OF 2022 Page 5 of 154
made to later amendments, it is only for contextual
completeness, and not as a source of power or as a basis
to determine liability in the present case. For the same
reason, wherever statutory provisions are reproduced or
discussed in the analysis below, they are to be understood
as references to the provisions as applicable during the
relevant period governing the present dispute.
B.1. The Act and the CCI’s merger control role
10. A reading of the preamble and the substantive
provisions of the Act makes it clear that it is an economic
legislation aimed at preserving competitive markets in
India. It establishes the CCI as the primary regulator
entrusted with, inter alia:
(i) enforcement against anticompetitive conduct
(such as cartels and abuse of dominance); and
(ii) ex ante review of certain transactions, called
“combinations”, to ensure that market structure is
not altered in a manner that causes an
appreciable adverse effect on competition.
11. For the purposes of the present case, put simply,
where the law requires it, certain mergers and acquisitions
must be shown to the regulator before they are
implemented, so the regulator can ask whether the
transaction is likely to harm competition in India. For
example: If two of the largest grocery chains in a city
propose to merge, the regulator may need to check
C.A. NO.4974 OF 2022 Page 6 of 154
whether that would reduce consumer choice or allow price
increases.
B.2. What is a “combination” under Section 5
12. Section 5 of the Act, as applicable during the relevant
period, has been reproduced hereunder:
“5. Combination — The acquisition of one or more
enterprises by one or more persons or merger or
amalgamation of enterprises shall be a combination of
such enterprises and persons or enterprises, if—
(a) any acquisition where—
(i) the parties to the acquisition, being the acquirer and
the enterprise, whose control, shares, voting rights or
assets have been acquired or are being acquired jointly
have,—
(A) either, in India, the assets of the value of more than
rupees one thousand crores or turnover more than
rupees three thousand crores; or
(B) in India or outside India, in aggregate, the assets of
the value of more than five hundred million US dollars,
including at least rupees five hundred crores in India,
or turnover more than fifteen hundred million US
dollars, including at least rupees fifteen hundred
crores in India; or
(ii) the group, to which the enterprise whose control,
shares, assets or voting rights have been acquired or
are being acquired, would belong after the acquisition,
jointly have or would jointly have,—
(A) either in India, the assets of the value of more than
rupees four thousand crores or turnover more than
rupees twelve thousand crores; or
(B) in India or outside India, in aggregate, the assets of
the value of more than two billion US dollars, including
at least rupees five hundred crores in India, or turnover
more than six billion US dollars, including at least
rupees fifteen hundred crores in India.
C.A. NO.4974 OF 2022 Page 7 of 154
(b) acquiring of control by a person over an enterprise
when such person has already direct or indirect control
over another enterprise engaged in production,
distribution or trading of a similar or identical or
substitutable goods or provision of a similar or identical
or substitutable service, if—
(i) the enterprise over which control has been acquired
along with the enterprise over which the acquirer
already has direct or indirect control jointly have,—
(A) either in India, the assets of the value of more than
rupees one thousand crores or turnover more than
rupees three thousand crores; or
(B) in India or outside India, in aggregate, the assets of
the value of more than five hundred million US dollars,
including at least rupees five hundred crores in India,
or turnover more than fifteen hundred million US
dollars, including at least rupees fifteen hundred
crores in India; or
(ii) the group, to which enterprise whose control has
been acquired, or is being acquired, would belong after
the acquisition, jointly have or would jointly have,—
(A) either in India, the assets of the value of more than
rupees four thousand crores or turnover more than
rupees twelve thousand crores; or
(B) in India or outside India, in aggregate, the assets of
the value of more than two billion US dollars, including
at least rupees five hundred crores in India, or turnover
more than six billion US dollars, including at least
rupees fifteen hundred crores in India.
(c) any merger or amalgamation in which—
(i) the enterprise remaining after merger or the
enterprise created as a result of the amalgamation, as
the case may be, have,—
(A) either in India, the assets of the value of more than
rupees one thousand crores or turnover more than
rupees three thousand crores; or
(B) in India or outside India, in aggregate, the assets of
the value of more than five hundred million US dollars,
including at least rupees five hundred crores in India,
C.A. NO.4974 OF 2022 Page 8 of 154
or turnover more than fifteen hundred million US
dollars, including at least rupees fifteen hundred
crores in India; or
(ii) the group, to which the enterprise remaining after
the merger or the enterprise created as a result of the
amalgamation, would belong after the merger or the
amalgamation, as the case may be, have or would
have,—
(A) either in India, the assets of the value of more than
rupees four-thousand crores or turnover more than
rupees twelve thousand crores; or
(B) in India or outside India, in aggregate, the assets of
the value of more than two billion US dollars, including
at least rupees five hundred crores in India, or turnover
more than six billion US dollars, including at least
rupees Fifteen Hundred Crores in India.
Explanation.— For the purposes of this section,—
(a) “control” includes controlling the affairs or
management by—
(i) one or more enterprises, either jointly or singly, over
another enterprise or group;
(ii) one or more groups, either jointly or singly, over
another group or enterprise;
(b) “group” means two or more enterprises which,
directly or indirectly, are in a position to—
(i) exercise twenty-six per cent or more of the voting
rights in the other enterprise; or
(ii) appoint more than fifty per cent of the members of
the board of directors in the other enterprise; or
(iii) control the management or affairs of the other
enterprise;
(c) the value of assets shall be determined by taking
the book value of the assets as shown, in the audited
books of account of the enterprise, in the financial year
immediately preceding the financial year in which the
date of proposed merger falls, as reduced by any
depreciation, and the value of assets shall include the
brand value, value of goodwill, or value of copyright,
patent, permitted use, collective mark, registered
proprietor, registered trade mark, registered user,
C.A. NO.4974 OF 2022 Page 9 of 154
homonymous geographical indication, geographical
indications, design or layout-design or similar other
commercial rights, if any, referred to in sub-section (5)
of Section 3.”
13. Primarily, Section 5 of the Act defines a
“combination” by reference to (i) the nature of the
transaction and (ii) certain financial thresholds. Broadly,
a transaction qualifies as a combination if it involves:
(i) an acquisition of shares, voting rights, assets, or
control; or
(ii) a merger or amalgamation, and the parties cross the
statutory asset and turnover thresholds set out in Section
5 of the Act. However, it must be noted that this threshold
inquiry is purely jurisdictional. Section 5 of the Act is not
yet the “harm to competition” test. It is the gateway that
determines whether the transaction enters the CCI’s
merger control jurisdiction. For example: If Company A
acquires Company B, but both are very small and below
the statutory thresholds, the transaction may not be a
“notifiable combination” at all. Conversely, if they are large
enough, it enters the merger control framework even if the
transaction may ultimately be harmless.
B.3. Section 6: the notification obligation and the “AAEC”
standard
14. Section 6 of the Act is also crucial for our discussions
in the present case and the same has been reproduced
hereunder prior to the 2023 Amendment:
C.A. NO.4974 OF 2022 Page 10 of 154
“6. Regulation of combinations.—
(1) No person or enterprise shall enter into a
combination which causes or is likely to cause an
appreciable adverse effect on competition within the
relevant market in India and such a combination shall
be void.
(2) Subject to the provisions contained in sub-section
(1), any person or enterprise, who or which proposes to
enter into a combination, shall give notice to the
Commission, in the form as may be specified, and the
fee which may be determined, by regulatio ns,
disclosing the details of the proposed combination,
within thirty days of—
(a) approval of the proposal relating to merger or
amalgamation, referred to in clause (c) of Section 5, by
the board of directors of the enterprises concerned with
such merger or amalgamation, as the case may be;
(b) execution of any agreement or other document for
acquisition referred to in clause (a) of Section 5 or
acquiring of control referred to in clause (b) of that
section.
(2A) No combination shall come into effect until two
hundred and ten days have passed from the day on
which the notice has been given to the Commission
under sub-section (2) or the Commission has passed
orders under Section 31, whichever is earlier.
(3) The Commission shall, after receipt of notice under
sub-section (2), deal with such notice in accordance
with the provisions contained in Sections 29, 30 and
31.
(4) The provisions of this section shall not apply to
share subscription or financing facility or any
acquisition, by a public financial institution, foreign
institutional investor, bank or venture capital fund,
pursuant to any covenant of a loan agreement or
investment agreement.
(5) The public financial institution, foreign institutional
investor, bank or venture capital fund, referred to in
sub-section (4), shall, within seven days from the date
of the acquisition, file, in the form as may be specified
C.A. NO.4974 OF 2022 Page 11 of 154
by regulations, with the Commission the details of the
acquisition including the details of control, the
circumstances for exercise of such control and the
consequences of default arising out of such loan
agreement or investment agreement, as the case may
be.
Explanation.— For the purposes of this section, the
expression—
(a) “foreign institutional investor” has the same
meaning as assigned to it in clause (a) of the
Explanation to Section 115AD of the Income-tax Act,
1961 (43 of 1961);
(b) “venture capital fund” has the same meaning as
assigned to it in clause (b) of the Explanation to clause
(23FB) of Section 10 of the Income-tax Act, 1961 (43 of
1961).”
15. A bare perusal of Section 6 of the Act reveals that it
contains both the substantive rule and the procedural
requirement for a combination. Section 6(1) of the Act
embodies the substantive rule and states that no person
or enterprise shall enter into a combination which causes
or is likely to cause an appreciable adverse effect on
competition (“AAEC”) within the relevant market in India
and such a combination is void. Section 6(2) of the Act
contains the procedural obligation and requires a person
or enterprise “proposing to enter into a combination” to
give notice to the CCI in the prescribed form and manner.
The design of the provision is primarily preventive. The
CCI is to assess competitive effects before the combination
is implemented. In common parlanc e, AAEC may be
understood as a material risk of harm to competition.
Such harm may include the ability to raise prices, reduce
output, reduce quality, slow innovation, or foreclose rivals
C.A. NO.4974 OF 2022 Page 12 of 154
within a properly defined market. For example: If after a
merger, there are only two suppliers left in a market and
entry is very difficult, the merged entity may gain the
power to raise prices. That risk is one way AAEC may
arise.
B.4. Section 20(4): the factors used to assess AAEC
16. Section 20(4) of the Act is crucial for the instant case
and has been reproduced hereunder:
“20. Inquiry into combination by Commission.
(4) For the purposes of determining whether a
combination would have the effect of or is likely to have
an appreciable adverse effect on competition in the
relevant market, the Commission shall have due
regard to all or any of the following factors, namely:—
(a) actual and potential level of competition through
imports in the market;
(b) extent of barriers to entry into the market;
(c) level of combination in the market;
(d) degree of countervailing power in the market;
(e) likelihood that the combination would result in the
parties to the combination being able to significantly
and sustainably increase prices or profit margins;
(f) extent of effective competition likely to sustain in a
market;
(g) extent to which substitutes are available or are
likely to be available in the market;
(h) market share, in the relevant market, of the persons
or enterprise in a combination, individually and as a
combination;
C.A. NO.4974 OF 2022 Page 13 of 154
(i) likelihood that the combination would result in the
removal of a vigorous and effective competitor or
competitors in the market;
(j) nature and extent of vertical integration in the
market;
(k) possibility of a failing business;
(l) nature and extent of innovation;
(m) relative advantage, by way of the contribution to
the economic development, by any combination having
or likely to have appreciable adverse effect on
competition;
(n) whether the benefits of the combination outweigh
the adverse impact of the combination, if any.”
17. Section 20(4) of the Act enumerates factors the CCI
may consider to assess whether a combination is likely to
cause AAEC (such as market shares and concentration,
barriers to entry, countervailing buyer power, likelihood of
foreclosure, and extent of vertical integration). These
factors guide an overall assessment rather than a
mechanical checklist. For example: Even if market shares
appear high, the risk of AAEC may be lower if entry is easy
(new competitors can quickly enter), or if powerful buyers
(large retailers or government procurement) can discipline
prices.
B.5. Combination Regulations and what a “notice” practically
contains
18. The procedural framework governing the notification
and review of combinations is set out in the Combination
Regulations. These Regulations operationalise the
obligations under Sections 5 and 6 of the Act by
C.A. NO.4974 OF 2022 Page 14 of 154
prescribing the form, manner, and content of the notice to
be furnished to the CCI.
19. Regulation 5 of the Combination Regulations is
essential for the present appeal and has been reproduced
hereunder:
“5. Form of notice for the proposed
combination.—
(1) Any enterprise which proposes to enter into a
combination shall give notice of such combination to the
Commission in accordance with sub -section (2) of
Section 6 of the Act and these regulations.
(2) The notice under sub-section (2) of Section 6 of the
Act, shall ordinarily be filed in Form I as specified in
Schedule II to these regulations, duly filled in and
accompanied by evidence of payment of requisite fee
by the parties to the combination.
(3) Notwithstanding anything contained in sub -
regulation (2) and without prejudice to the provisions of
sub-regulation (5), the parties to the combination may,
at their option, give notice in Form II, as specified in
Schedule II to these regulations, preferably in the
instances where—
(a) the parties to the combination are engaged in
production, supply, distribution, storage, sale or trade
of similar or identical or substitutable goods or
provision of similar or identical or substitutable
services and the combined market share of the parties
to the combination after such combination is more than
fifteen percent (15%) in the relevant market;
(b) the parties to the combination are engaged at
different stages or levels of the production chain in
different markets, in respect of production, supply,
distribution, storage, sale or trade in goods or provision
of services, and their individual or combined market
share is more than twenty five percent (25%) in the
relevant market.
C.A. NO.4974 OF 2022 Page 15 of 154
(3A) The parties to the combination shall give notice in
Form I or Form II, as the case may be, in accordance
with the notes to Form I and Form II issued by the
Commission and published on its official website, from
time to time.
(4) Where in the course of inquiry, it is found by the
Commission that it requires additional information, the
Commission may direct the parties to the combination
to file such additional information:
Provided that the time taken by the parties to the
combination in filing such additional information shall
be excluded from the period provided in sub-section
(2A) of Section 6 of the Act; sub-section (11) of Section
31 of the Act and sub-regulation (1) of regulation 19 of
these regulations.
(5) Having due regard to the provisions of sub -
regulations (2) and (4), in cases where the parties to
the combination have filed notice in Form I and the
Commission requires information in Form II to form its
prima facie opinion whether the combination is likely
to cause or has caused appreciable adverse effect on
competition within the relevant market, it shall direct
the parties to the combination to file notice in Form II
as specified in Schedule II to these regulations:
Provided that the fee already paid by the parties to the
combination while filing notice in Form I shall be
reduced from the fee payable for filing notice in Form
II:
Provided further that the time period mentioned in sub-
section (2A) of Section 6 of the Act, sub-section (11) of
Section 31 of the Act and sub -regulation (1) of
regulation 19 of these regulations shall commence from
the date of receipt of notice in Form II.
(6) If the requisite details are not available for any of
the columns in Form I or Form II, the date on which they
may be submitted should be clearly indicated against
those columns, by the parties to the combination:
Provided that the time taken by the parties to the
combination to submit the requisite details shall be
excluded from the period provided in sub-section (2A)
of Section 6 of the Act; sub-section (11) of Section 31 of
C.A. NO.4974 OF 2022 Page 16 of 154
the Act and sub-regulation (1) of regulation 19 of these
regulations.
(7) The reference to the “board of directors” in clause
(a) of sub-section (2) of Section 6 of the Act, shall mean
and include,—
(a) the individual himself or herself including a sole
proprietor of a proprietorship firm;
(b) the karta in case of a Hindu Undivided Family
(HUF);
(c) the board of directors in case of a company;
(d) in case of a corporation established by or under any
Central, State or Provincial Act or an association of
persons or a body of individuals, whether incorporated
or not, in India or outside India or anybody corporate
incorporated by or under the laws of a country outside
India or a cooperative society registered under any law
relating to cooperative societies or a local authority, the
person or the body so empowered by the legal
instrument that created the said bodies;
(e) in the case of a firm, the partner(s) so authorized;
(f) in the case of any other artificial juridical person not
falling within any of the preceding sub-clauses, by that
person or by some other person competent to act on his
behalf.
(8) The reference to the “other document” in clause (b)
of sub-section (2) of Section 6 of the Act shall mean any
binding document, by whatever name called,
conveying an agreement or decision to acquire control,
shares, voting rights or assets:
Provided that if the acquisition is without the consent
of the enterprise being acquired, any document
executed by the acquiring enterprise, by whatever
name called, conveying a decision to acquire control,
shares or voting rights shall be the “other document”:
Provided further that where a public announcement
has been made in terms of the Securities and Exchange
Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 2011, for acquisition of
shares, voting rights or control, such public
C.A. NO.4974 OF 2022 Page 17 of 154
announcement shall be deemed to be the “other
document”.
(9) Where, in a series of steps or individual
transactions that are related to each other, assets are
being transferred to an enterprise for the purpose of
such enterprise entering into an agreement relating to
an acquisition or merger or amalgamation with another
person or enterprise, for the purpose of Section 5 of the
Act, the value of assets and turnover of the enterprise
whose assets are being transferred shall also be
attributed to the value of assets and turnover of the
enterprise to which the assets are being transferred.”
20. Regulation 5 of the Combination Regulations governs
the form of notice to be filed under Section 6(2) of the Act.
Such notice is ordinarily filed in Form I, which requires
disclosure of the transaction structure, the parties and
their business activities, market overlaps or linkages, and
other information necessary for the CCI to form a prima
facie view on whether the proposed combination is likely
to cause AAEC. Form II is a more detailed form of
notification which may be filed at the parties’ option in
specified circumstances, or required by the CCI where
further detail is necessary to form its prima facie opinion.
The intensity of disclosure and scrutiny thus scales with
the potential competitive significance of the transaction.
21. In addition to prescribing the form of notice, the
statutory scheme empowers the CCI to seek further
information or clarification from the notifying parties. This
power flows from Section 29 of the Act read with
Regulation 5(4) of the Combination Regulations and is
commonly exercised through Requests for Information
(“RFIs”), which enable the CCI to test, verify, or clarify the
C.A. NO.4974 OF 2022 Page 18 of 154
disclosures made in the notice. For example, where a
notice asserts that there are no horizontal overlaps
between the parties, but the CCI’s preliminary
examination indicates potential overlaps, it may seek
additional particulars such as market information, lists of
competitors and customers, or details of supply and
distribution arrangements.
22. The architecture of Form I is also relevant because it
is not confined to financial thresholds or market shares. It
is intended to elicit (i) a coherent description of the
combination as an economic arrangement, and (ii) the
materials on which the parties themselves assessed and
justified the transaction. In particular, Item 5.3 calls for
the parties to state, in substance, the purpose / rationale
of the proposed combination; and Item 8.8 calls for
furnishing material documents prepared by or for the
parties in relation to the combination (including internal
analyses, presentations, memoranda, or reports placed
before decision-makers). These disclosures assist the CCI
in testing whether the notice reflects the transaction as
conceived and intended to operate.
23. First, Item 5.3 requires the notifying parties to state,
in substance, the economic and strategic purpose /
rationale of the proposed combination. The object is to
ensure that the CCI is informed not merely of the legal
form of the transaction, but of what the combination is
intended to achieve in commercial terms, and how it is
intended to operate. Secondly, Item 8.8 requires the
C.A. NO.4974 OF 2022 Page 19 of 154
parties to furnish material documents prepared by or for
the parties in relation to the combination, including
documents that analyse, evaluate, or justify the
transaction (such as internal notes, presentations,
strategy papers, assessments, or reports placed before
decision-makers). The disclosure of such documents is
designed to assist the CCI in testing whether the
description of the transaction in the notice matches the
transaction as it was conceived, evaluated, and presented
within the parties’ own decision-making processes.
B.6. “Inter-connected steps” and the substance -over-form
principle
24. It is a recognised feature of contemporary
commercial transactions that a single economic
arrangement may be implemented through multiple
agreements, instruments, or sequential steps. The merger
control framework under the Act and the Combination
Regulations expressly acknowledges this commercial
reality and seeks to ensure that regulatory scrutiny is
directed at the transaction as it is intended to operate in
substance.
25. Regulation 9(4) of the Combination Regulations
addresses such situations. It provides that where the
ultimate intended effect of a business transaction is
achieved by way of a series of steps or through smaller
individual transactions, one or more of which may
independently amount to a combination, the parties are
required to file a single notice covering all such inter-
C.A. NO.4974 OF 2022 Page 20 of 154
connected steps / transactions. The object of this
provision is to ensure that the CCI is placed in a position
to assess the transaction in its entirety, rather than in
fragmented or artificial segments.
26. Regulation 9(5) of the Combination Regulations
reinforces this approach by expressly incorporating the
principle of substance over form. It mandates that the
requirement of filing notice shall be determined with
respect to the substance of the transaction, and that any
structure of a transaction which has the effect of avoiding
notice in respect of the whole or any part of a combination
is to be disregarded. In other words, the CCI is not
confined to the formal labels or sequencing adopted by the
parties, but is required to examine the real commercial
objective and cumulative effect of the transaction while
determining compliance with the notification requirement.
For example: Company A wants to acquire Company B but
does it in three steps: (1) buys 9% today, (2) takes an
option to buy 42% later, and (3) enters governance
agreements giving it decisive veto rights now. Even if each
step is described as “small” or “independent”, if they are
part of one integrated commercial plan to achieve
acquisition or control, the law expects disclosure as one
integrated transaction.
B.7. Why “rights” matter: control and material influence
27. In merger control, competitive effects may arise not
only from the acquisition of a majority shareholding, but
C.A. NO.4974 OF 2022 Page 21 of 154
also from the acquisition of rights that enable a party to
influence the affairs, management, or strategic conduct of
an enterprise. This follows from the inclusive explanation
of “control” in Section 5 of the Act, as applicable during
the relevant period, read with the CCI’s merger-control
approach, which looks to the real ability of a party to
shape commercial conduct and decision -making rather
than merely to the percentage of shares acquired. Such
influence may arise through rights contained in
shareholders’ agreements or other governance
instruments, including veto rights over annual budgets or
business plans, approval rights in respect of capital
expenditure, appointment or removal of key managerial
personnel, restrictions on the transfer of material assets,
consent requirements for entry into significant contracts,
or limitations on the manner in which the enterprise may
conduct its business in the market. The acquisition of
such rights may alter the incentives, strategic choices, or
competitive behaviour of the target enterprise, and is
therefore relevant to the CCI’s assessment of a
combination.
28. For example, an investor may acquire only a minority
shareholding, such as twenty five percent, in a target
enterprise. However, if that investor is vested with the
power to block the approval of the annual business plan,
major capital investments, or expansion into new markets,
the investor may be able to exercise material influence
over how the target competes. Such influence, even in the
C.A. NO.4974 OF 2022 Page 22 of 154
absence of majority ownership, may have a bearing on the
competitive dynamics of the relevant market and is
therefore a matter which the CCI is required to consider
while examining a proposed combination.
B.8. What the CCI does with a notice
29. Once a notice is filed in accordance with Section 6(2)
of the Act, the CCI proceeds in terms of the statutory
scheme governing the inquiry into combinations. This
scheme is principally contained in Section 29 of the Act,
which prescribes the procedure for investigation, and
Section 31 of the Act, which empowers the CCI to pass
orders upon completion of its assessment as to whether
the proposed combination is likely to cause AAEC.
30. Under Section 31 of the Act, the CCI may approve the
combination unconditionally, approve the combination
subject to such modifications as it may deem necessary,
or prohibit the combination altogether if it is of the opinion
that the combination has caused or is likely to cause an
appreciable adverse effect on competition within the
relevant market in India. Merger control under the Act is
fundamentally ex ante in character. The CCI’s approval is
premised on the disclosures made by the notifying parties
and the competitive assessment carried out on the basis
of those disclosures at the stage prior to implementation
of the transaction. The statutory design assumes that the
notifying party will place before the CCI sufficient and
accurate information to enable it to evaluate the
C.A. NO.4974 OF 2022 Page 23 of 154
transaction as it is intended to operate in the market. For
example, the CCI is not expected to infer or speculate
about the structure or competitive implications of a
transaction. The obligation lies on the notifying party to
present the transaction in a manner that enables the CCI
to assess its likely operation and impact on competition,
before the transaction is given effect.
B.9. Penalties and consequences: non -notification vs
misleading or incorrect disclosure
31. Chapter VI of the Act contains the provisions relating
to penalties and offences. These provisions are designed to
secure compliance with the merger control framework by
attaching legal consequences to failures in notification
and to false or misleading disclosures made to the CCI.
For the purposes of the present case, three provisions are
of particular relevance.
32. Section 43A of the Act deals with failure to give notice
of a combination as required under Section 6(2) of the Act.
It is attracted where a transaction which is notifiable
under the Act is implemented without the requisite notice
being furnished to the CCI, or where the conduct of the
parties, viewed in substance, amounts to a failure to notify
what was statutorily required to be notified. For example,
if an enterprise completes a notifiable acquisition of shares
or control without filing any notice under Section 6(2) of
the Act, the consequence contemplated under Section 43A
of the Act may arise.
C.A. NO.4974 OF 2022 Page 24 of 154
33. Section 44 of the Act addresses a distinct class of
contraventions in the context of a combination. It applies
where a person, being a party to a combination, makes a
statement which is false in any material particular, or
omits to state a material particular, in a notice, document,
or information required to be furnished under the Act or
the rules or regulations framed thereunder, with the
knowledge contemplated by the provision. Section 45 of
the Act is broader in its reach. It concerns offences relating
to the furnishing of particulars, documents, or
information under the Act, and applies where a person
makes a statement or furnishes a document which is false
in a material particular, omits to state a material fact
knowing it to be material, or wilfully alters, suppresses, or
destroys a document required to be furnished. Thus, while
both provisions are concerned with the integrity of
information placed before the CCI, Section 44 of the Act is
specifically directed to false statements and material
omissions by a party to a combination in the combination
process, whereas Section 45 of the Act is wider and also
extends to more aggravated misconduct concerning
required documents. For example, if a notifying party
states that there are no agreements affecting th e
competitive conduct of the target enterprise, while
withholding an agreement that materially alters
incentives, access, or strategic behaviour in the market,
the applicability of Section 44 of the Act or Section 45 of
the Act may arise, depending on the precise nature of the
C.A. NO.4974 OF 2022 Page 25 of 154
statement, omission, document, and the mental element
prescribed by the statute.
34. Conceptually, the statutory scheme thus draws a
distinction between two categories of contraventions. The
first concerns non-notification of a notifiable combination,
which is addressed by Section 43A of the Act. The second
concerns defective, false, or misleading notification or
disclosure, which is addressed by Sections 44 and 45 of
the Act. Depending on the facts of a given case, one or both
categories may be engaged, depending on the law that was
required to be notified or disclosed and what was in fact
furnished to the CCI. This distinction also matters to the
statutory consequences available after the CCI’s ex ante
assessment. An approval under Section 31 of the Act is
founded on the notice and the information furnished at
the time of review. The Act separately provides for
consequences (i) for failure to notify (Section 43A of the
Act) and (ii) for materially false or misleading statements /
material omissions in a notice or information furnished
(Sections 44 and 45 of the Act), while also imposing a time-
bound limit on the CCI’s power to initiate an AAEC inquiry
under Section 20(1) of the Act (discussed below).
Therefore, the statutory route to be invoked is determined
by the applicable conditions and limits.
B.10. Limitation under the proviso to Section 20(1)
35. Section 20(1) of the Act empowers the CCI to
inquire into whether a combination has caused or is likely
C.A. NO.4974 OF 2022 Page 26 of 154
to cause an appreciable adverse effect on competition. The
proviso to Section 20(1) of the Act, imposes a temporal
limitation on the exercise of this power by providing that
the CCI shall not initiate an inquiry under that sub-
section after the expiry of one year from the date on which
such combination has taken effect.
36. The expression “has taken effect”, used in the proviso
to Section 20(1) of the Act, has given rise to interpretative
disputes in practice. Such disputes commonly concern,
first, the point in time at which a combination can be said
to have taken effect, and secondly, the manner in which
the limitation provision operates where there is
controversy regarding the completeness of notification, the
legality of implementation, or the precise nature of the
transaction which was placed before the CCI for
assessment. For example, where a transaction is
implemented in stages, a question may arise as to whether
a combination “takes effect” upon the occurrence of an
initial step, such as the payment of consideration or the
issuance of shares, or only at a later stage when control or
material influence over the target enterprise is actually
acquired. The proviso reflects a legislative concern for
transactional certainty and timely regulatory action in
merger control, given the ex ante character of review under
Sections 6 and 31 of the Act.
37. With this statutory and regulatory framework in
view, we now proceed to set out the factual background
C.A. NO.4974 OF 2022 Page 27 of 154
and the rival submissions in a manner necessary to frame
the issues arising in the present appeal.
C. Factual Background and Procedural History
C.1. Parties and their roles in the transaction
38. The present proceedings arise from a transaction
structure by which Amazon, the appellant, proposed to
acquire an equity interest in Future Coupons Private
Limited
6, an entity within the Future Group, together with
certain rights associated with that investment. The
dispute also concerns how the transaction and related
arrangements, including arrangements connected with
Future Retail Limited
7, were presented for regulatory
approval under the Act and the Combination Regulations.
C.2. Amazon group entities relevant to the dispute
39. Amazon is a direct subsidiary of Amazon.com Inc.
8.
Amazon was the investing entity through which the
proposed acquisition of shareholding in FCPL was
structured.
40. The Amazon group carries on business operations in
India through various Indian affiliates. For the purposes
of the present dispute, reference is made to Amazon Seller
Services Private Limited
9, Amazon Retail India Private
6
In short “FCPL”
7
In short “FRL”
8
In short “ACI”
9
In short “ASSPL”
C.A. NO.4974 OF 2022 Page 28 of 154
Limited
10, Amazon Pay (India) Private Limited
11, Amazon
Wholesale (India) Private Limited
12, and Amazon Transport
Services Private Limited
13.
41. ASSPL operates an e -commerce marketplace
platform in India and facilitates sales by third-party sellers
to end consumers. ARIPL undertakes retail of certain
products through the marketplace. APIPL provides digital
payment services. AWIPL carries on wholesale activities.
ATSPL provides services connected with shipping and
logistics. These Indian affiliates are referred to in the
record principally because certain commercial
arrangements were stated to exist, or to be contemplated,
between such Amazon affiliates and entities within the
Future Group.
C.3. Future Group entities relevant to the dispute
42. The transaction concerned entities belonging to the
Future Group. The principal entities relevant to the
dispute are Future Corporate Resources Private Limited
14,
FCPL, and FRL.
43. FCPL is the entity in which Amazon proposed to
acquire shareholding. The proposed acquisition was
stated to be on a fully diluted basis, and the governance
and investor protection rights associated with that
10
In short “ARIPL”
11
In short “APIPL”
12
In short “AWIPL”
13
In short “ATSPL”
14
In short “FCRPL”
C.A. NO.4974 OF 2022 Page 29 of 154
investment were set out in the transaction documents
described later.
44. FCRPL is described in the record as an entity within
the promoter group structure of the Future Group. It is
referred to because, as part of the transaction steps
notified for regulatory approval, (i) certain changes were
proposed in relation to FCPL’s shareholding, and (ii) an
internal transfer step was proposed by which FCPL would
acquire an additional equity shareholding in FRL through
a transfer of shares held by FCRPL.
45. FRL is a listed company described as the flagship
retail entity of the Future Group. FRL carried on retail
operations through various formats and brands, and it is
the enterprise around which the retail business and retail
assets of the group were centred. FRL assumes
significance in the present proceedings because the
transaction documents and disclosures referred to certain
rights and arrangements said to operate in relation to FRL,
albeit through FCPL.
46. The relationship between FCPL and FRL is relevant
on two planes. First, FCPL had subscribed to equity
warrants of FRL which were convertible into equity shares
representing 7.30 percent of the share capital of FRL on a
fully diluted basis, within a stipulated period. Secondly,
the notified transaction contemplated, in addition to the
warrants held by FCPL, a step by which FCPL would
acquire an additional equity interest in FRL through an
C.A. NO.4974 OF 2022 Page 30 of 154
internal transfer of shares within the Future Group
structure.
47. The promoter group associated with the Future
Group, led by Mr. Kishore Biyani, is also referred to in the
record. In substance, the Future Group relationships
relevant for present purposes are that FCPL and FCRPL
were entities within the promoter group structure, while
FRL was the listed retail operating company whose shares
and governance arrangements formed part of the wider
commercial context.
48. The notified transaction, as presented for regulatory
approval, was routed through Amazon’s proposed
acquisition of shareholding in FCPL, coupled with rights
and obligations contained in the transaction instruments,
and linked in the disclosures to FCPL’s shareholding and
arrangements in relation to FRL. The transaction steps
and the principal instruments by which they were
implemented are set out next.
C.4. The transaction architecture and key instruments
49. The transaction structure relevant to the present
proceedings was implemented and presented through a
set of agreements executed in August 2019, together with
certain pre-existing arrangements within the Future
Group structure. For clarity, the principal instruments are
set out below, along with the purpose they served in the
overall architecture.
C.5. FCPL Share Subscription Agreement
C.A. NO.4974 OF 2022 Page 31 of 154
50. On 22.08.2019, Amazon and FCPL entered into a
share subscription agreement
15. In substance, a share
subscription agreement is the contract by which an
investor agrees to bring money into a company, and the
company agrees to issue new shares to the investor in
return. It ordinarily sets out the number and nature of the
shares to be issued, the price to be paid, and the
conditions that must be satisfied before the shares are
issued.
51. Under the FCPL SSA, Amazon agreed to acquire 49
percent of the equity share capital of FCPL on a fully
diluted basis, by way of a preferential allotment, for a
consideration of INR 1,431 crores. “Fully diluted” indicates
that the percentage is measured by assuming that any
instruments which can convert into shares are treated as
having been converted, so that the percentage reflects the
stake after such conversions. A “preferential allotment”
indicates that the shares are issued to a specified investor
rather than being offered generally.
52. The FCPL SSA further contemplated that Amazon’s
investment would be undertaken only after certain steps
within the Future Group structure were completed, and
also contemplated certain steps to follow thereafter. In the
notice placed before the CCI, these steps were described
as Transaction I and Transaction II, and Amazon’s
acquisition of shareholding in FCPL under the FCPL SSA
15
In short “the FCPL SSA”
C.A. NO.4974 OF 2022 Page 32 of 154
was described as Transaction III. In simple terms,
Amazon’s investment was presented as being linked to the
completion of those internal restructuring steps, and not
as an isolated or independent allotment.
C.6. FCPL Shareholders’ Agreement
53. On 22.08.2019, Amazon, FCPL, and other parties
within the Future Group structure entered into a
shareholders’ agreement
16. In substance, a shareholders’
agreement is the contract by which the shareholders agree
on how the company will be governed after the investment,
including how key decisions will be taken, what
information the investor is entitled to receive, and what
rights shareholders have in relation to matters requiring
approval. The FCPL SHA set out the governance
framework and the rights and obligations of the
shareholders of FCPL following Amazon’s acquisition of
shareholding under the FCPL SSA.
54. The FCPL SHA also described rights that were linked,
in the disclosures, to FRL by reason of FCPL’s investment
and holding in FRL. In effect, it contemplated that certain
matters concerning FRL, where FCPL’s consent or decision
would be relevant as a shareholder of FRL, would not be
acted upon by FCPL without Amazon’s prior written
consent, as described in the transaction disclosures. Put
simply, although Amazon was acquiring shareholding in
FCPL, the FCPL SHA contemplated that Amazon would
16
In short “The FCPL SHA”
C.A. NO.4974 OF 2022 Page 33 of 154
have a say, through FCPL, in specified decisions
connected with FCPL’s position and rights in relation to
FRL.
C.7. Shareholders’ agreement relating to FRL and the warrants
background
55. Prior to execution of the FCPL SSA and the FCPL
SHA, FCPL had subscribed to equity warrants of FRL
which were convertible into equity shares representing
7.30 percent of FRL’s share capital on a fully diluted basis,
within a stipulated period.
56. On 12.08.2019, FCPL, FRL, and the relevant
shareholders and promoters within the Future Group
structure executed a shareholders’ agreement relating to
FRL
17.The FRL SHA set out the mutual rights and
obligations of its parties as shareholders of FRL, including
rights exercisable by FCPL as a shareholder of FRL.
57. The warrants transaction was stated to have been
separately notified and approved by the CCI by order dated
15.04.2019 in Combination Registration No. C -
2019/03/653. The FRL SHA, executed thereafter, forms
part of the background against which the FCPL SHA
described certain rights in relation to FRL, to be exercised
through FCPL.
C.8. Business commercial arrangements
17
In short “FRL SHA”
C.A. NO.4974 OF 2022 Page 34 of 154
58. Alongside the above instruments, the record refers to
certain existing and contemplated commercial
arrangements between (i) affiliates of the Amazon group in
India, and (ii) FRL and other entities within the Future
Group. These commercial arrangements were described as
Business Commercial Agreements
18.
59. The BCAs included arrangements relating to listing
and sale of products on the Amazon marketplace platform,
arrangements connected with delivery programmes,
arrangements relating to supply of certain products, and
arrangements relating to acceptance of digital payment
instruments. The relationship between these commercial
arrangements and the notified transaction steps later
became a matter of contest in the proceedings.
C.9. Chronology and procedural history
60. On 22.08.2019, Amazon and the Future Group
parties executed the FCPL SSA and the FCPL SHA, which
together governed Amazon’s proposed investment into
FCPL and the rights associated with that investment.
61. On 23.09.2019, Amazon filed a notice under Section
6(2) of the Act in Form I under the Combination
Regulations, which was registered as Combination
Registration No. C-2019/09/688.
62. In the notice, Amazon described the combination as
comprising three transactions, structured to operate
sequentially:
18
In short “ the BCAs”
C.A. NO.4974 OF 2022 Page 35 of 154
(i) Transaction I: the issue of 9,183,754 Class A voting
equity shares of FCPL to FCRPL, with FCPL being a
wholly owned subsidiary of FCRPL both prior to and
immediately after such issuance;
(ii) Transaction II: the transfer to FCPL of 13,666,287
shares of FRL held by FCRPL, representing 2.52
percent of FRL’s issued, subscribed and paid up equity
share capital on a fully diluted basis; and
(iii) Transaction III: Amazon’s acquisition, by
preferential allotment, of subscription shares
representing 49 percent of FCPL’s total issued,
subscribed and paid up equity share capital on a fully
diluted basis.
It may be noted that this numbering reflects the
description in the notice as placed by the appellant,
whereas the approval order dated 28.11.2019 later
described Amazon’s acquisition of 49 percent of FCPL
as “Transaction I” and referred to the other constituent
steps as “Transaction II” and “Transaction III”.
63. Amazon stated that its obligation to consummate
Transaction III was subject to completion of Transactions
I and II. It was also stated that Transactions I and II were
not notifiable on a standalone basis, being intra-group
steps. In relation to Transaction III, Amazon asserted that
it was, on a standalone basis, covered by the “target
C.A. NO.4974 OF 2022 Page 36 of 154
exemption” based on FCPL’s asset and turnover position
as of 31.03.2019. Without prejudice to its stated position
on exemption, Amazon nevertheless notified the
combination, including with reference to Regulation 9(4)
of the Combination Regulations.
64. In describing the transaction documents, Amazon
stated that, in relation to the notified combination, the
parties had executed only the FCPL SSA and the FCPL
SHA. The notice also referred to FRL and to the FRL SHA.
In that context, Amazon stated that it would acquire
certain rights under the FCPL SHA to protect its
investment, including rights that required FCPL to obtain
Amazon’s prior written consent before FCPL could decide
on, or implement, any matter under the FRL SHA where
FCPL’s consent was required. It was also stated that
Amazon would not have any direct shareholding in FRL
and would not acquire rights directly in FRL, and that the
rights were exercisable through FCPL.
65. The notice referred to FCPL’s earlier investment in
FRL through equity warrants, noting the approval dated
15.04.2019 in Combination Registration No. C -
2019/03/653. It was also stated that subsequent to the
warrants transaction, the promoters, FCPL and FRL
entered into the FRL SHA. The notice additionally referred
to certain existing and contemplated BCAs involving
entities within the Amazon group and FRL, including
arrangements governing listing and sale of FRL products
on the marketplace, an agreement for supply of certain
C.A. NO.4974 OF 2022 Page 37 of 154
products by a Future Group entity to an Amazon entity,
and a memorandum of understanding relating to offering
Amazon Pay as a payment option at FRL outlets and
websites. Amazon stated that these arrangements were
not inter-connected with, and were not part of, the notified
combination. It was also stated that, given the proximity
of execution, certain of these arrangements were proposed
to be given effect to only after receipt of the CCI’s approval
in relation to the notified combination.
66. During review of the notice, communications were
issued requiring removal of information gaps. Amazon
filed its responses on 15.11.2019. In those responses,
Amazon elaborated upon the stated rationale for the
investment and also addressed queries regarding the
nature of rights referred to in relation to FRL and the FRL
SHA, as well as the context in which FCPL’s investment in
FRL was described.
67. The appellant has also relied upon the breadth of the
contemporaneous review process to submit that the
Commission was not dealing with a bare or skeletal filing.
According to the record as placed before us, the notice in
Form I ran into substantial length with numerous
annexures; two Requests for Information were issued by
the Commission; detailed written responses, together with
annexures, were furnished; and a meeting was held with
senior officials of the Commission in which the retail-side
linkages, including FRL-facing aspects and the
contemporaneously contemplated commercial
C.A. NO.4974 OF 2022 Page 38 of 154
arrangements, were addressed. The appellant further
asserts that representatives of the Future Group also
participated in that exercise. These matters are relevant,
not to dilute the notifying party’s duty of candour, but to
assess whether the Commission was, in fact, denied a real
opportunity to examine the FRL-linked dimensions of the
transaction at the ex ante stage.
68. On 28.11.2019, the CCI approved the combination
notified in Combination Registration No. C-2019/09/688.
Thereafter, on 25.03.2021, FCPL moved an application
before the CCI raising grievances regarding the
completeness and correctness of disclosures made in the
notice and related submissions, and seeking initiation of
proceedings in relation to the notice and the approval
granted.
69. On 04.06.2021, the CCI issued a show cause notice
to Amazon initiating proceedings under Sections 43A, 44
and 45 of the Act in relation to the disclosures made in the
notice and the approval granted. In those proceedings,
responses were filed and hearings took place, including
participation by FCPL, and also participation by a third-
party intervener.
70. In the course of those proceedings, certain internal
note/communications by email of the appellant, including
communications dated 24.05.2018, 10.07.2018 and
19.07.2019, were brought on record. These were relied
upon by the Commission as bearing upon the internal
C.A. NO.4974 OF 2022 Page 39 of 154
conception of the transaction, including the commercial
objective sought to be achieved through FCPL, the
relationship with FRL, and the broader structure through
which strategic rights in relation to FRL were said to be
pursued. The appellant disputed both the inferences
sought to be drawn from them and their legal significance,
contending that the earlier materials related to exploratory
structures not ultimately adopted and that the finally
executed documents alone governed the notified
transaction.
C.10. CCI’s order dated 17.12.2021
71. By order dated 17.12.2021, the CCI concluded the
proceedings initiated under Sections 43A, 44 and 45 of the
Act in relation to the notice filed by Amazon in
Combination Registration No. C-2019/09/688 and the
approval granted on 28.11.2019.
72. In substance, the CCI proceeded on the footing that
merger control under the Act is an ex ante regime and that
its approval necessarily rests upon the completeness and
correctness of disclosures made in the notice and in the
supporting material furnished during review. The CCI
noted that the notice, as filed in Form I, described the
combination and the connected documentation in a
particular manner and, during review, Amazon
maintained its position on the scope and inter-connection
of the arrangements disclosed.
C.A. NO.4974 OF 2022 Page 40 of 154
73. The CCI then held that the disclosures made by
Amazon did not place the CCI in a position to evaluate the
combination in its real scope and intended operation. The
CCI took the view that the notice and the subsequent
correspondence portrayed the transaction as a limited
investment into FCPL, while material arrangements
bearing upon the strategic alignment of the parties, and
the rights and interests sought to be acquired in the
overall transaction setting, were either not disclosed in full
or were presented as unconnected with the notified
combination.
74. In particular, the CCI found that the manner in
which the transaction documents and the rights and
arrangements relating to FRL were presented in the notice
did not reflect, in substance, the full set of
contemporaneous arrangements that were relevant to the
CCI’s assessment. The CCI further held that the
commercial arrangements between Amazon group entities
and FRL (described in the record as the BCAs and related
commercial understandings) could not, on the CCI’s
assessment, be treated as entirely divorced from the
combination where they were executed in close proximity
and were part of the broader commercial structure
through which the parties proposed to operationalise their
alignment in the relevant sectors.
75. On this basis, the CCI concluded that the
deficiencies were not immaterial. It held that the
omissions and statements in the notice and accompanying
C.A. NO.4974 OF 2022 Page 41 of 154
material were of a nature that affected the regulatory
assessment itself, since the CCI’s task is to examine the
combination as it would operate in the market and to
evaluate whether it is likely to cause AAEC.
76. The CCI, accordingly, held that Amazon had:
(i) failed to notify the combination as required under
Section 6(2) of the Act in its true scope and substance,
thereby attracting proceedings and penalty under Section
43A of the Act; and
(ii) made false statements and/or omitted material
particulars in the notice and in documents/information
furnished in the course of review, thereby attracting
Sections 44 and 45 of the Act.
77. Consequent upon these findings, the CCI:
(i) kept the approval granted on 28.11.2019 in
Combination Registration No. C -2019/09/688 in
abeyance;
(ii) directed Amazon to file a fresh notice in Form II within
the stipulated period; and
(iii) imposed monetary penalties upon Amazon under
Section 43A of the Act and under Sections 44 and 45 of
the Act, with consequential directions regarding payment.
C.11. Decision of the NCLAT
78. Amazon challenged the CCI’s order dated 17.12.2021
before the NCLAT. The NCLAT, by the impugned judgment,
C.A. NO.4974 OF 2022 Page 42 of 154
affirmed the CCI’s core conclusions as to the nature of the
disclosures made in the notice and the consequences that
followed under the Act and the Combination Regulations.
79. In addressing Amazon’s challenge, the NCLAT
proceeded on the basis that the CCI was entitled to
examine whether the notice, and the material furnished
during review, placed the CCI in a position to assess the
combination as it was structured and intended to operate.
The NCLAT held that the CCI’s review could not be
rendered ineffective by selective disclosure, and that the
statutory scheme requires full and candid disclosure of
material particulars relevant to merger control scrutiny.
80. The NCLAT endorsed the CCI’s view that the
transaction documents and the rights arising therefrom
were required to be considered in substance, including in
the context of inter-connected steps. It upheld the CCI’s
conclusion that the impugned proceedings w ere not
confined to a purely technical deficiency, but concerned
the CCI’s ability to assess the combination on the basis of
complete and accurate material. The NCLAT also
sustained the CCI’s decision to keep the earlier approval
in abeyance and to direct a fresh notice in Form II, holding
that such directions were linked to the CCI’s statutory
obligation to ensure that combinations are assessed on
proper disclosures and within the framework
contemplated by the Act and the Combination
Regulations.
C.A. NO.4974 OF 2022 Page 43 of 154
81. In relation to penalties, the NCLAT affirmed the CCI’s
jurisdiction to invoke the relevant penal provisions where
the statutory requirements were found to be attracted on
the facts as recorded. To the extent the NCLAT interfered
with any part of the penalty or directions, it did so on the
basis of its evaluation of the statutory thresholds and
proportionality within the scheme of Chapter VI. Being
aggrieved by the judgment of the NCLAT, which upheld the
CCI’s order dated 17.12.2021 in the manner indicated
above, Amazon has instituted the present civil appeal.
D. Submissions of the parties
D.1. Submissions on behalf of the appellant
82. Learned senior counsel Mr. Gopal Subramanium
appearing for the appellant submitted that the impugned
proceedings had proceeded on an erroneous
understanding of the notice filed under Section 6(2) of the
Act, of the scope of the CCI’s jurisdiction while reviewing
a notified combination, and of the statutory requirements
governing disclosures. It was urged that the CCI’s order
dated 17.12.2021, and the judgment of the NCLAT
affirming it, were vitiated both on substance and on
jurisdictional and procedural grounds.
D.1.1. Proceedings are said to be triggered by a collateral
dispute; arbitration is urged to be legally irrelevant
83. It was further submitted that the proceedings before
the CCI had been initiated upon an application moved by
C.A. NO.4974 OF 2022 Page 44 of 154
FCPL in the midst of disputes between the parties arising
out of contractual arrangements, which were already the
subject matter of arbitration and allied proceedings. It was
asserted that the CCI’s process had been invoked as a
countermeasure to the appel lant’s contractual
enforcement.
84. The appellant further submitted that the arbitration
proceedings had no determinative bearing on the present
dispute under the Act. It was emphasised that the CCI
itself had recorded that, while some factual foundations
might overlap, the legal issues in arbitration and those
arising in the proceedings under the Act were mutually
independent. On this basis, it was pleaded that any
attempt to rely upon pleadings or positions taken in
arbitration to sustain action under Sections 43A, 44 and
45 of the Act was misconceived.
85. The appellant also contended that the contexts were
distinct. A merger control review was an ex ante statutory
assessment of whether a proposed combination was likely
to cause AAEC. Arbitration, on the other hand, involved
an ex post adjudication of contractual rights and alleged
breaches after the relevant arrangements had taken effect.
It was argued that statements made in arbitration could
not be mechanically treated as admissions of non -
disclosure or misrepresentation in the merger filing.
86. It was also submitted that there had been no
misrepresentation of the CCI’s approval order before the
arbitral tribunal, and that the appellant’s case in
C.A. NO.4974 OF 2022 Page 45 of 154
arbitration had proceeded on the agreements and
covenants as executed and disclosed.
D.1.2. Section 43A is inapplicable as this is not a case of
“failure to give notice”
87. The appellant submitted that Section 43A of the Act
concerned failure to give notice as required under Section
6(2) of the Act. The present matter, it was argued, was not
one of non-notification. A notice in Form I had been filed,
the filing had run into a substantial record with
annexures, the CCI had issued requests for information,
detailed responses had been furnished, and the
combination had been approved under Section 31(1) of the
Act.
88. On these premises, the appellant contended that
proceedings and penalty under Section 43A of the Act were
legally unsustainable, because the statutory mischief
contemplated by Section 43A of the Act was not attracted
where notice had in fact been given and the combination
had been approved after review.
D.1.3. Distinction between Section 5 and Section 6; the role of
Regulations 9(4) and 9(5)
89. The appellant submitted that the CCI and the NCLAT
had proceeded on an incorrect construction of the
statutory scheme. It was argued that Section 5 of the Act
concerned what constituted a “combination” and therefore
what triggered the obligation to notify. Section 6 of the Act,
read with Section 20(4) of the Act, concerned what the CCI
C.A. NO.4974 OF 2022 Page 46 of 154
had to examine in order to assess competitive effects and
determine whether the combination was likely to cause
AAEC.
90. It was further argued that Regulations 9(4) and 9(5)
of the Combination Regulations required the notifying
party to disclose inter-connected steps and to place
substance over form, so that the CCI might assess the
transaction as it was intended to operate. However,
according to the appellant, these regulations did not
expand the definition of a “combination” beyond Section 5
of the Act, nor did they convert every disclosed
arrangement into an independent Section 5 of the Act
trigger.
91. On this reasoning, the appellant submitted that it
had correctly identified the FCPL SSA and the FCPL SHA
as the transaction documents giving rise to the event
under Section 5 of the Act, namely the acquisition of
shares in FCPL. At the same time, it was pleaded that the
FRL SHA and the BCAs had been disclosed to enable the
CCI to perform its assessment under Section 6 of the Act
of competitive effects.
D.1.4. Disclosure is asserted to be comprehensive; all eight
agreements are said to have been placed before the CCI
92. The appellant submitted that the CCI and the NCLAT
had erred in proceeding on the premise that material
agreements had not been disclosed. It was urged that all
eight agreements, including the FRL SHA and the BCAs,
C.A. NO.4974 OF 2022 Page 47 of 154
had been furnished in the filing and had been explained
through the narrative and responses to the CCI’s queries.
93. The appellant submitted that the gravamen of the
CCI’s case was not concealment of rights, but
dissatisfaction with the appellant’s characterisation of
disclosed rights. It was argued that this distinction was
crucial when Sections 44 and 45 of the Act were invoked,
because those provisions were concerned with false
statements or omission of material particulars required to
be stated, and not with a subsequent disagreement on how
disclosed rights ought to be labelled.
D.1.5. FRL is argued to be central; “but for FRL” the FCPL
acquisition is said to be exempt
94. The appellant submitted that FRL had formed an
integral part of the combination as notified. It was argued
that the combination had been notified as a composite
structure, including inter-connected steps, precisely
because FRL had been commercially and structurally
central to the arrangement.
95. It was further submitted that, if one were to view the
investment as only an acquisition of shares in FCPL, the
transaction would, on the appellant’s case, have fallen
within the small target exemption on account of FCPL’s
assets and turnover. It was further argued that the
notification had therefore been made “but for FRL”, and
that the CCI’s later approach, which was said to treat the
approval as if it were confined to a narrow payments
C.A. NO.4974 OF 2022 Page 48 of 154
aspect, was inconsistent with the basis on which the filing
had been made and assessed.
D.1.6. The approval would cover retail also: the CCI is said
to be impermissibly re-characterising its own approval
96. The appellant submitted that it had made extensive
disclosures to assist the CCI’s assessment of AAEC in the
Indian retail market. It was pleaded that the retail market
had been identified as the only plausible relevant market
for purposes of assessment, and that the competitive
analysis had been presented on the assumption of
integration between the relevant Amazon group entities
and FRL.
97. It was submitted that the payments market had been
separately disclosed where required, and that the CCI had
conducted a distinct analysis of payments-related aspects,
but that the filing and review had not been confined to
payments alone. The appellant therefore contended that
the CCI was impermissibly seeking to re-characterise the
approval order by asserting that approval had been
granted only with reference to payments and not the retail
market. Such an approach, it was argued, was contrary to
the record of disclosures and to the structure of the
approval itself.
D.1.7. Sections 44 and 45 are inapplicable: alleged “cherry-
picking” and mischaracterisation of material
98. The appellant submitted that Sections 44 and 45 of
the Act were not attracted. It was argued that the CCI had
C.A. NO.4974 OF 2022 Page 49 of 154
selectively relied on particular statements from the filing,
without reading them in the context of the queries asked,
the structure of Form I, and the accompanying annexures
and responses.
99. It was further argued that internal documents and
emails had been mischaracterised. According to the
appellant, documents predating the final structure were
not reflective of what was ultimately notified, and the
executed agreements had superseded prior negotiations
and understandings. It was also pleaded that the
substance of the internal email of 19.07.2019 had stood
reflected in the contractual provisions and disclosures
actually made.
100. The appellant also contested the reasoning that,
because the filing stated that the BCAs were not “part of
the combination”, the CCI had been precluded from
assessing their competitive effects. It was urged that such
agreements had been disclosed under the competitive
assessment portion precisely so that the CCI could
evaluate any competitive implications, even if those
agreements did not constitute an independent trigger
under Section 5 of the Act. The appellant further
submitted that there was no requirement to disclose the
basis for arriving at the consideration amount, and that
an alleged absence of valuation rationale could not be
elevated into misrepresentation, particularly where the
statutory scheme and Form I did not require such
disclosure.
C.A. NO.4974 OF 2022 Page 50 of 154
D.1.8. Allegations of “fraud” are urged to be misconceived
101. The appellant submitted that the NCLAT had erred
in treating the matter as one involving fraud on a statutory
authority. It was contended that a finding of fraud, in this
statutory setting, would have required a clear foundation
that something required by law to be disclosed had been
suppressed with intent to evade the Act, and that such
suppression had materially impacted the CCI’s exercise of
jurisdiction and its competitive assessment. It was
submitted that neither the CCI nor the NCLAT had
demonstrated such material impact.
102. The appellant further contended that, in the present
case, the transaction documents had been notified, the
CCI had conducted a review, and approval had been
granted before implementation of the notified
combination. It was also argued that certain arguments
now raised by the CCI, including those invoking Section
21A of the Act, were afterthoughts not forming part of the
CCI’s reasons, and that a statutory authority could not
improve its case at the appellate stage beyond what was
contained in the impugned order.
D.1.9 Directions to file Form II, keeping approval in abeyance,
and the scale of penalties are all assailed
103. The appellant submitted that the CCI had no
statutory power to keep its approval order in abeyance and
to direct a fresh filing in Form II after approval. It was
argued that merger control was ex ante in character, that
C.A. NO.4974 OF 2022 Page 51 of 154
the CCI was a creature of statute, and that the directions
issued travelled beyond the scheme of Sections 29 and 31
of the Act.
104. The appellant further submitted that the magnitude
of penalty imposed was unprecedented and
disproportionate, and was inconsistent with the scale of
penalties generally imposed under Section 43A of the Act.
It was also contended that the impugned order travelled
beyond the show cause notice, thereby violating principles
of natural justice.
105. For all these reasons, the appellant submitted that
the order dated 17.12.2021 passed by the CCI and the
judgment of the NCLAT affirming it deserved to be set
aside, along with the consequential directions and
penalties.
D.2. Submissions on behalf of Respondent No. 1 (Competition
Commission of India)
106. The submissions advanced on behalf of Respondent
No. 1 by learned Additional Solicitor General Mr. N.
Venkataraman and Mr Sanyat Lodha, learned Advocate-
on-Record proceeded on the premise that the order dated
17.12.2021 and the judgment of the NCLAT dated
13.06.2022 were rooted in the statutory scheme of merger
control and in concurrent findings on non-disclosure and
misrepresentation.
107. It was submitted that the present case turned on the
notifying party’s statutory duty to place before the CCI the
C.A. NO.4974 OF 2022 Page 52 of 154
complete and correct combination, including all inter-
connected steps, and to make full and truthful disclosure
of material particulars in the notice and the material filed
during review. It was contended that where approval was
obtained on incomplete or incorrect disclosures, the
approval could not be permitted to operate as a bar against
corrective action under the Act. The following were the
main assertions of Respondent No. 1:
D.2.1. Duty of full disclosure in an ex ante merger control
regime
108. It was submitted that merger control under the Act
was ex ante in character. It was contended that Section
6(2) of the Act required notice before a combination was
given effect, so that the CCI could assess the true
competitive impact in advance.
109. It was further submitted that compliance was not
achieved by filing a form alone. The duty was to disclose
the true nature, scope, and purpose of the combination,
and to furnish material particulars so that the regulatory
assessment could be undertaken on an accurate
foundation. Misrepresentation, suppression, or
concealment of material information was said to strike at
the root of the approval process. Reliance was placed on
the Combination Regulations to submit that the statutory
mandate was operationalised through Form I disclosures,
the power to seek additional information during review,
and the power to direct filing in Form II where a deeper
assessment was necessary.
C.A. NO.4974 OF 2022 Page 53 of 154
D.2.2. Inter-connected steps and substance over form
110. Great emphasis was placed on Regulation 9(4) of the
Combination Regulations and Regulation 9(5) of the
Combination Regulations. It was submitted that
Regulation 9(4) of the Combination Regulations required a
single notice covering all steps where the ultim ate
intended effect of a transaction was achieved through a
series of inter-connected steps. It was further submitted
that Regulation 9(5) of the Combination Regulations
mandated that the filing requirement was determined with
reference to the substance of the transaction, and that any
structuring having the effect of avoiding notice for the
whole or part of the combination had to be disregarded.
111. On this basis, it was contended that the transaction
instruments comprising the FCPL SSA, the FCPL SHA,
and the FRL SHA formed part of one integrated
commercial understanding designed to confer strategic
rights and material influence over FRL through FCPL. It
was further argued that denial of inter -connection,
coupled with treatment of the BCAs as unrelated, had
prevented a proper appreciation of the transaction in its
true scope.
D.2.3. How the combination was presented in the notice and
how approval was obtained
112. It was submitted that, at the stage of notification, the
transaction had been presented as an investment in FCPL
and its coupons and payments-related business. It was
C.A. NO.4974 OF 2022 Page 54 of 154
contended that the disclosures had repeatedly asserted
absence of direct or indirect shareholding in FRL and
absence of direct acquisition of rights in FRL. It was
further submitted that, even where FRL-related rights had
been referred to, they had been characterised as limited
investor protection rights exercisable through FCPL and
derived from the FRL SHA, which had been stated to have
been negotiated independently of the investment. It was
also submitted that certain BCAs between Amazon group
entities and FRL had been disclosed, while expressly
stating that such arrangements were neither inter -
connected with nor part of the combination, and that this
position had been reiterated during review in responses to
the CCI’s queries.
113. It was argued that approval under Section 31(1) of
the Act dated 28.11.2019 had been granted on the basis
of the combination as notified and explained during
review. It was submitted that approval could be accorded
only in respect of the combination claimed and assessed,
and not in respect of an unpresented or concealed
transaction. Reliance was also placed on the condition
recorded in the approval order that the approval was
contingent and would stand revoked if information
furnished was found to be incorrect, and that approval
would not operate as immunity from proceedings under
other provisions of the Act.
D.2.4. Basis for initiation of proceedings under Sections 43A,
44 and 45
C.A. NO.4974 OF 2022 Page 55 of 154
114. It was submitted that an application dated
25.03.2021 had been placed before the CCI asserting that
false representations had been made and material
particulars had been suppressed while obtaining
approval. It was contended that, upon examination, a view
had been formed that the FRL SHA had not been identified
or notified as part of the combination, that strategic
interest in FRL had been concealed, and that false or
incorrect representations had been made while
suppressing material facts.
115. It was submitted that the show cause notice dated
04.06.2021 had set out contradictions on three themes: (i)
the purpose of the combination, (ii) the relationship
between the agreements, and (iii) the nature of rights over
FRL. It was argued that the show cause notice had called
upon the appellant to explain why it should not be held to
have failed to give notice in respect of the FRL SHA and to
have furnished false or incorrect information and
suppressed material facts, thereby attracting Sections
43A, 44 and 45 of the Act.
D.2.5. Internal communications relied upon; “twin entity”
structure and “foot-in-the-door” objective
116. It was submitted on behalf of Respondent No. 1 that
internal communications of the appellant, including
communications dated 24.05.2018, 10.07.2018 and
19.07.2019, were placed on record during the show cause
proceedings and demonstrated that the transaction was
C.A. NO.4974 OF 2022 Page 56 of 154
internally conceived in broader strategic terms than those
reflected in the notice. In that regard, reliance was placed,
inter alia, on the following expressions appearing in the
internal record: that Amazon was not then allowed to
make direct FDI investment in FRL without Government
approval; that if Amazon made a direct investment in FRL,
its Indian affiliates could not enter into BCAs with FRL for
sale of FRL products on Amazon’s marketplace platform;
and that “Amazon would like a ‘Foot-in-the-door’.” It was
further pointed out that the same material recorded that
Amazon had “strategic interest over FRL’s retail business
and assets” and that the rationale for investment in FCPL
was said to include “the acquisition of material and
strategic rights over FRL”, entry into various BCAs,
acquisition of an indirect shareholding in FRL, and
acquisition of a call option to acquire FRL shares when
regulations would permit.
117. It was further submitted that another internal
communication dated 10.07.2018 described FRL as one of
the key players in the offline retail market to partner with,
identified strategic objectives including the ability to
become the single largest shareholder in FRL when
permissible, the preclusion of competitive interest, and
commercial arrangements to bolster the appellant’s ultra-
fast delivery programme, while the internal email dated
19.07.2019 referred to the proposed “twin entity”
structure under which the appellant would acquire 49
percent in FCPL and FCPL would acquire 8 to 10 percent
C.A. NO.4974 OF 2022 Page 57 of 154
in FRL. Reliance was also placed on the assertion that the
number of FRL shares to be held through FCPL was
calculated such that the appellant could indirectly hold
the same number of FRL shares that it would otherwise
have acquired directly, and that the 25 percent premium
was linked to strategic rights and a call option. On this
basis, it was argued that these communications revealed
the true intended structure and purpose of the transaction
and that their non-furnishing under Item 8.8, while
furnishing the “Taj Coupons” presentation instead,
materially distorted the picture placed before the
Commission.
D.2.6. Non-disclosure and misrepresentation: documents,
purpose, and inter-connected steps
118. In this regard, first, it was submitted that relevant
documents had been suppressed under Item 8.8 of Form
I, because key internal communications evidencing the
asserted true intent and structure had not been furnished
despite the disclosure obligation and despite opportunities
during review.
119. Secondly, it was submitted that the purpose and
rationale disclosed under Item 5.3 of Form I, and the
nature of rights disclosed under Item 5.1.3, had not
reflected the asserted real transaction. It was contended
that the narrative had been framed around F CPL’s
business potential and that FRL had been projected as a
factor of financial strength, while the strategic retail
C.A. NO.4974 OF 2022 Page 58 of 154
purpose and “foot-in-the-door” objective had not been
disclosed.
120. Thirdly, it was submitted that the FRL SHA and the
BCAs had not been notified as inter-connected steps, and
that the filing had expressly asserted that the commercial
arrangements were neither part of nor connected with the
combination. It was argued that this had prevented the
CCI from assessing the combination as an integrated
commercial whole.
121. On these bases, it was contended that the complete
and correct combination had not been notified as required
by Section 6(2) of the Act read with the Combination
Regulations, thereby attracting Section 43A of the Act. It
was also argued that the notice and responses had
contained false statements or omissions of material
particulars, thereby attracting Sections 44 and 45 of the
Act.
D.2.7. Keeping approval in abeyance, directing Form II, and
imposing penalties
122. It was submitted that, once approval was found to
have been obtained on incomplete or incorrect disclosures,
the CCI had been justified in keeping the earlier approval
in abeyance and directing a fresh filing in Form II so that
the combination could be assess ed on the basis of
complete and truthful information. The directions were
sought to be supported by reference to Regulation 5(5) of
the Combination Regulations and by the submission that
the CCI possessed authority to pass consequential
C.A. NO.4974 OF 2022 Page 59 of 154
directions in proceedings concerning furnishing of
information. Reliance was also placed on Section 45(2) of
the Act as a source of residuary power to pass such orders
as were necessary to preserve the statutory purpose.
123. It was further argued that where approval was
procured by fraud or misrepresentation, the CCI had the
power to undo the consequences of such approval, and
that the power to revoke included the lesser power to keep
approval in abeyance pending a fresh and proper filing. It
was submitted that penalties had been justified in view of
the nature of contraventions found, and that the NCLAT
had upheld the penalty under Section 43A of the Act while
reducing penalties under Sections 44 and 45 of the Act.
D.2.8. Misrepresentation before other fora and arbitral findings
on the scope of approval
124. It was submitted that the appellant had
misrepresented the scope of the approval order before
other fora by portraying the approval as covering a broader
business transaction than what had been notified and
assessed. It was also submitted that the arbitral tribunal
had returned findings or commentary on the nature and
scope of the CCI’s approval without the CCI being a party,
and that an approval order was in rem. Reliance was
placed on Vidya Drolia v. Durga Trading Corporation
19
to submit that disputes in rem are non-arbitrable.
D.2.9. Limitation under the proviso to Section 20(1)
19
(2021) 2 SCC 1
C.A. NO.4974 OF 2022 Page 60 of 154
125. It was submitted that the proviso to Section 20(1) of
the Act did not bar the present proceedings. It was
contended that limitation applied where a combination
had taken effect as contemplated by law, whereas where
the true and complete combination had not been notified
in the manner required, the proviso could not be invoked
to defeat corrective action.
126. It was also argued that the present proceedings had
arisen from a notice filed under Section 6(2) of the Act and
action taken in relation to misrepresentation and
suppression, and that this was not to be equated with
initiation of a fresh inquiry in the manner contemplated
under Section 20(1) of the Act. Reliance was also placed
on the condition recorded in the approval order concerning
incorrect information, contending that the condition
remained operative and had no temporal embargo.
D.2.10. Response to the criticism that the order dated
17.12.2021 contains no AAEC analysis
127. It was submitted that the criticism that the order
dated 17.12.2021 did not contain an alternate AAEC
analysis was misconceived. It was contended that the
focus of that order had not been to re-evaluate AAEC on
the merits of the correct combination, but to determine
whether the notice and disclosures had been truthful and
complete so as to enable a proper AAEC inquiry.
128. It was argued that a detailed AAEC analysis could
only follow a proper filing containing true, correct and
C.A. NO.4974 OF 2022 Page 61 of 154
complete particulars of the actual combination, and that
directing Form II while keeping the earlier approval in
abeyance had been procedurally sequenced on that basis.
129. On these submissions, it was prayed that the civil
appeal be dismissed and that the impugned judgment be
upheld.
D.3. Submissions on behalf of Respondent Nos. 2 and 3
130. Respondent Nos. 2 and 3 had, in substance, adopted
submissions broadly aligned with those noticed in relation
to Respondent No. 1 on the issues of disclosure-driven ex
ante merger control, inter-connected steps/substance-
over-form, suppression of internal documents (including
emails to senior management), and the consequent
justification for keeping the approval in abeyance and
directing a fresh Form II filing. Apart from the aforesaid
commonality, the following additional/differentiating
submissions were emphasised.
D.3.1. Respondent No. 2’s additional points
131. It was submitted that the present civil appeal raised
no substantial question of law; rather, it impermissibly
sought a de novo re -appreciation of evidence and
concurrent findings of fact, which was contended to be
beyond the permissible appellate remit.
132. It was further submitted that there was no stay
operating against the directions issued by the NCLAT, yet
the appellant had not complied with them, including the
direction to file a fresh notice in Form II under the
C.A. NO.4974 OF 2022 Page 62 of 154
Combination Regulations within the stipulated period,
and, on that premise, it was argued that the appellant was
not entitled to discretionary relief.
D.3.2. Respondent No. 3’s additional points
133. Respondent No. 3 submitted, additionally, that the
impugned conduct had a distinct illegality dimension,
namely, that the transaction structure was a device to
obtain an entry or foothold in India’s multi-brand retail
trade sector by circumventing the extant FDI regime, and
that the consequences were borne by small traders and
MSMEs represented by Respondent No. 3.
134. It was submitted that, had full and candid disclosure
been made at the notification stage, the CCI could have
examined the matter with the benefit of inter-agency
inputs, including, as contended, recourse contemplated
under the regulatory framework, and th at this
underscored why suppression or misrepresentation could
not be treated as inconsequential merely because an AAEC
assessment had been undertaken on the truncated
narrative.
135. It was also submitted that limitation objections
predicated on the proviso to Section 20(1) of the Act could
not be invoked as a shield against proceedings founded on
fraud or misrepresentation, particularly where the
gravamen was non-disclosure attracting the statutory
consequences under Sections 44 and 45 of the Act.
E. Issues for determination
C.A. NO.4974 OF 2022 Page 63 of 154
136. The rival submissions enlisted above, and the nature
of the relief sought in this appeal, give rise to certain
questions which fall for determination. Since the present
appeal is preferred under Section 53T of the Act against
the decision of the NCLAT, a threshold question also arises
as to the proper scope and standard of interference by this
Court with the conclusions reached by the NCLAT,
including the extent to which concurrent findings
returned by the CCI and affirmed by the NCLAT may be
revisited in an appeal of the present nature.
137. Subject to the above, the following issues arise for
consideration in the present appeal:
Issue (I): Whether, on a proper construction of Section
6(2) of the Act read with Regulations 9(4) and 9(5) of the
Combination Regulations, the appellant was obligated to
notify, in a single comprehensive notice, all inter -
connected steps and agreements by which the ultimate
intended effect of the transaction was to be achieved; and
whether the notice filed in Form I under the Combination
Regulations satisfied that obligation in substance.
Issue (II): Whether the CCI and the NCLAT were correct
in holding that the appellant’s manner of notification and
disclosure, including the treatment of the FRL SHA and
the BCAs, amounted to a failure to notify the complete
combination as required by law, thereby attracting action
under Section 43A of the Act.
C.A. NO.4974 OF 2022 Page 64 of 154
Issue (III): Whether the findings of suppression,
omission, and misrepresentation recorded against the
appellant, including in relation to Item 5.3 and Item 8.8
of Form I under the Combination Regulations and the
responses furnished during review, satisfy the statutory
requirements of Sections 44 and 45 of the Act.
Issue (IV): Whether, and to what extent, the proviso to
Section 20(1) of the Act bears upon the CCI’s authority to
initiate and conclude proceedings of the present nature,
having regard to the basis on which the show cause notice
dated 04.06.2021 was issued and the character of the
proceedings culminating in the order dated 17.12.2021.
Issue (V): Whether the CCI possessed the statutory power
to keep the approval order dated 28.11.2019 in abeyance
and to direct the appellant to file a fresh notice in Form II
under the Combination Regulations; and whether such
power can be traced to the Act and the Combination
Regulations, including the residuary power under Section
45(2) of the Act, the scheme of Regulation 5(5) of the
Combination Regulations, and the condition recorded in
the approval order itself.
Issue (VI): Whether the impugned proceedings are
vitiated for breach of the principles of natural justice,
including the appellant’s contention that the final findings
and directions travelled beyond the show cause notice
dated 04.06.2021, or that the appellant was otherwise
denied a fair opportunity to meet the case against it.
C.A. NO.4974 OF 2022 Page 65 of 154
F. Findings and Analysis
F.1. Scope of appellate interference under Section 53T of the
Act
138. Before we turn to the issues framed above, it is
necessary to clarify the scope of interference in an appeal
under Section 53T of the Act. The present civil appeal is
directed against an appellate decision of the NCLAT,
arising from proceedings before a specialist regulator,
namely the CCI, exercising merger control jurisdiction
under the Act.
139. Section 53T of the Act provides a statutory appeal to
this Court by an aggrieved party against a decision or
order of the NCLAT, subject to limitation and the power to
condone delay on sufficient cause. Though the provision
is couched in broad terms, its exercise must still be
understood in the context of the statutory scheme. The
CCI is an expert regulator entrusted with fact-intensive
economic assessment. The NCLAT is the designated
appellate forum to examine the legality, correctness, and
sustainability of the CCI’s orders on the record. In this
institutional design, an appeal under Section 53T of the
Act cannot be treated as a third round of factual
adjudication on the same material, as though this Court
were another fact-finding tribunal.
140. Accordingly, while exercising jurisdiction under
Section 53T of the Act, this Court ordinarily applies settled
appellate discipline. It examines whether the NCLAT has
applied the correct legal principles, adopted the correct
C.A. NO.4974 OF 2022 Page 66 of 154
approach to statutory interpretation, acted within
jurisdiction, and reached conclusions sustainable in law
and from the record. It does not, in the ordinary course,
reweigh evidence merely because another view is possible.
141. Where concurrent findings of fact are returned by the
CCI and affirmed by the NCLAT, interference is warranted
only on recognised grounds such as findings based on no
evidence; ignoring material evidence; reliance on irrelevant
considerations; misreading vital documents; conclusions
so unreasonable that no fair-minded adjudicator could
reach them; or application of an incorrect legal test. The
same restraint applies to submissions which, in
substance, seek reappreciation of facts under the guise of
a legal challenge.
142. At the same time, the present appeal raises questions
which are, in their core, questions of law and jurisdiction,
including the construction of Section 6(2) of the Act read
with Regulation 9(4) and Regulation 9(5) of the
Combination Regulations, the legal threshold for
attracting Sections 43A, 44 and 45 of the Act, the effect of
the proviso to Section 20(1) of the Act, the source and
limits of the CCI’s power to keep an approval in abeyance
and direct a fresh Form II filing, and compliance with
natural justice in the issuance and adjudication of the
show cause notice. On such questions, the correctness of
the legal framework applied is itself under scrutiny.
143. We shall, therefore, proceed on the following basis:
C.A. NO.4974 OF 2022 Page 67 of 154
(i) where the controversy turns on interpretation of
the statute and regulations, the existence or limits of
statutory power, or compliance with natural justice,
the matter will be decided on first principles of
statutory construction and administrative law; and
(ii) where the controversy turns on factual
appreciation, this Court will not undertake a fresh
fact-finding exercise, but will test whether the
concurrent findings are supported by the record, rest
on a correct understanding of law, and are free from
perversity or material procedural unfairness.
144. It is in this framework that we now proceed to
consider the issues arising for determination.
Issue (I): Whether, on a proper construction of Section 6(2)
of the Act read with Regulation 9(4) and Regulation 9(5) of
the Combination Regulations, the appellant was required to
notify all inter-connected steps and agreements forming
the composite transaction in a single notice; and whether
its Form I filing met that requirement in substance.
145. This issue concerns the scope of the notification
obligation in a structured transaction. Section 6(2) of the
Act requires that a proposed combination be notified so
that the CCI can undertake an ex ante assessment of its
competitive effects. This is because the ex ante review
contemplated by Section 6(2) of the Act can be
meaningfully undertaken only if the proposed
C.A. NO.4974 OF 2022 Page 68 of 154
arrangement is presented as it is designed to operate, and
not in a fragmented manner that obscures connected
steps or the substance of the transaction. Regulation 9(4)
and Regulation 9(5) of the Combination Regulations
address the manner in which that notification must be
made where the parties seek to achieve the commercial
outcome through multiple related instruments and steps.
The issue has arisen because the CCI and the NCLAT
proceeded on the basis that the notice filed in Form I did
not, in substance, disclose the complete set of inter-
connected steps and agreements by which the ultimate
intended effect of the transaction was to be achieved.
F.2. What Regulation 9(4) and Regulation 9(5) of the
Combination Regulations require
146. Regulation 9(4) of the Combination Regulations
provides that: “Where the ultimate intended effect of a
business transaction is achieved by way of a series of steps
or smaller individual transactions which are inter -
connected, one or more of which may amoun t to a
combination, a single notice, covering all these
transactions, shall be filed by the parties to the
combination.” The plain terms of Regulation 9(4) of the
Combination Regulations make two features clear. First,
the trigger is the “ultimate intended effect” of the business
transaction, and not the isolated form of any one step.
Second, where that ultimate intended effect is achieved
through “a series of steps” or “smaller individual
C.A. NO.4974 OF 2022 Page 69 of 154
transactions” that are “inter-connected”, the regulation
mandates “a single notice” “covering all these
transactions”. The object is to prevent fragmentation,
namely the presentation of a composite arrangement in a
piecemeal manner that obscures how the in tended
commercial outcome is to be achieved. The words
“covering all these transactions” are of wide amplitude and
are not confined to only those steps which, viewed in
isolation, may independently qualify as a combination.
They require that the CCI be presented with the full set of
inter-connected steps through which the parties propose
to achieve the ultimate intended effect, so that the
combination is evaluated as a composite whole for the
purposes of Section 6(2) of the Act.
147. Regulation 9(5) of the Combination Regulations
further provides that: “The requirement of filing notice
under regulation 5 of these regulations shall be
determined with respect to the substance of the
transaction and any structure of the transaction(s),
comprising a combination, that has the effect of avoiding
notice in respect of the whole or a part of the combination
shall be disregarded.” Regulation 9(5) of the Combination
Regulations is, therefore, an express anti-avoidance
direction. It instructs that the obligation to notify is to be
tested by the “substance of the transaction”, and it
requires the CCI to disregard any “structure” that “has the
effect of avoiding notice” in respect of the whole or a part
of the combination. Read together with Regulation 9(4) of
C.A. NO.4974 OF 2022 Page 70 of 154
the Combination Regulations, the scheme is clear. The
regulations aim to ensure that parties do not, by
transactional architecture, defeat the statutory purpose of
notification by splitting, sequencing, or describing
connected arrangements in a manner that results in
avoidance of notice of the combination in substance. At
the same time, the focus of these provisions is on whether
the CCI was placed in a position to assess the combination
with full knowledge of the connected steps and linkages
that explain how the arrangement is intended to operate.
These provisions do not turn the notification regime into a
purely formal exercise of labels. They require disclosure of
the connected steps so that the CCI can examine the
combination on its substance, while disregarding any
structuring that is designed, or has the effect, of avoiding
notice of the whole or a part of the combination.
F.3. The controversy that falls for determination under Issue
(I)
148. The controversy here is not whether the CCI is
entitled to examine the transaction in substance. The
controversy is whether the Form I notice, read as a whole,
failed to place before the CCI the inter-connected steps
and agreements that were said to constitute the composite
arrangement, in particular the FRL SHA and the BCAs,
with the consequence that the notice could not be treated
as a single comprehensive notification within the meaning
of Regulation 9(4) of the Combination Regulations and was
C.A. NO.4974 OF 2022 Page 71 of 154
not a disclosure of substance within the meaning of
Regulation 9(5) of the Combination Regulations.
149. It is also necessary to identify the limits of this issue.
Issue (I) is confined to the completeness of notification and
disclosure for the purposes of Section 6(2) of the Act read
with Regulation 9(4) and Regulation 9(5) of the
Combination Regulations. It does not finally determine
whether any particular instrument, by itself, constituted a
notifiable combination under Section 5 of the Act, or
whether the conduct amounted to a failure to notify
attracting penalty. Those questions arise under the
subsequent issues.
F.4. Findings on disclosure and comprehensiveness of the
notice
150. The determination of this issue must be anchored in
the contemporaneous regulatory record that was before
the CCI in the Section 6(2) of the Act proceeding which
culminated in an approval under Section 31(1) of the Act.
That record comprises the Form I notice as filed, the
executed instruments annexed to the notice, the
information furnished in response to the CCI’s
requisitions during the statutory review, and the approval
order itself. It is with reference to this record, and not by
hindsight reconstruction, that the Court must assess
whether the notice “covered” the inter-connected steps for
the purposes of Regulation 9(4) of the Combination
Regulations, and whether the CCI was placed in a position
to examine the transaction by reference to its substance
C.A. NO.4974 OF 2022 Page 72 of 154
for the purposes of Regulation 9(5) of the Combination
Regulations.
151. Read as a whole, the filing did not confine itself to an
isolated acquisition step. The notice referred to the
agreements explaining the structure and the rights
proposed to be acquired, including the shareholders’
agreement in relation to FRL (FRL SHA), and also referred
to the commercial arrangements relied upon by the
respondents as constituting relevant inter-connections,
including the business cooperation arrangements (BCAs).
The contemporaneous record shows that copies of the FRL
SHA and the BCAs were placed before the Commission,
that the rights and rationale pertaining to those
arrangements were addressed in the notification and
subsequent responses, and that the Commission’s own
RFIs and approval order demonstrate that the FRL-linked
aspects of the transaction were in fact examined at the ex
ante stage. If that be so, this is not a case in which the
Commission can be said to have been left ignorant of the
FRL-facing dimensions of the transaction or denied a real
opportunity to examine them at the ex ante stage.
152. Nor does the record, as presented by the appellant,
support the suggestion that the FRL SHA or the FRL -
facing aspects of the transaction lay inert in some remote
annexure without intelligible linkage to the notified
structure. The appellant’s case is that the FRL SHA was
expressly referenced in the notification itself, repeatedly
cross-referred to in the FCPL SHA, and further explained
C.A. NO.4974 OF 2022 Page 73 of 154
in the responses furnished during review. If that is so, the
respondents’ suggestion that the relevant FRL -linked
material was merely buried in the record becomes
correspondingly weaker.
153. The respondents are correct in one limited sense.
Their case is not that the FRL SHA and the BCAs were
wholly absent from the record. Their case is that these
arrangements were not notified as constituent inter -
connected steps of the combination, but were disclosed
only in a legally distancing or under -characterised
manner. That distinction must be confronted directly. In
our view, however, Regulation 9(4) does not make the
sufficiency of notice depend upon the notifying party’s own
adoption of the Commissi on’s eventual legal
characterisation. Once the executed agreements, the
rights flowing therefrom, their temporal proximity, and
their commercial linkages were before the Commission in
the same review process, and the Commission in fact
queried and examined those FRL-linked aspects during
review, the matter could not readily be recast as one of
absence of a composite notice in any real sense. At most,
the controversy was one of asserted under -
characterisation or legal distancing of disclosed
arrangements, and not of their complete non-placement
before the Commission.
F.5. Application of Regulation 9(4) and Regulation 9(5) of the
Combination Regulations
C.A. NO.4974 OF 2022 Page 74 of 154
154. Where the notice, read with contemporaneous
clarifications, renders the interconnection intelligible and
operationally capable of assessment, the requirement of a
single notice ‘covering’ inter-connected steps cannot be
treated as having failed merely because the notifying party
did not itself adopt the regulator’s later characterisation of
every disclosed arrangement. The transaction was not
presented through fragmented and sequential
notifications so as to deprive the CCI of a composite
picture. The relevant instruments were brought on record
in a single notice and were processed as part of one review
under Section 6(2) of the Act. Regulation 9(4) of the
Combination Regulations is not satisfied by the
mechanical inclusion of papers divorced from the
narrative, but by a notice which, read as a whole, discloses
the connected steps and explains the linkages by which
the ultimate intended effect is to be achieved. On the
present record, that functional requirement stands met.
155. Once it is shown that the notice disclosed the
agreements and the material rights and relationships
arising from them, a later dispute as to the proper legal or
economic characterisation of those rights does not, by
itself, justify treating Regulation 9(5) as having been
violated. A later disagreement about how those rights
ought to have been described, or whether a particular set
of rights should be viewed through a different analytical
lens, does not convert disclosure into non-disclosure.
Regulation 9(5) of the Combination Regulations requires
C.A. NO.4974 OF 2022 Page 75 of 154
disclosure of substance, not the adoption of a particular
label.
156. A notice “covering” inter-connected steps for the
purposes of Regulation 9(4) of the Combination
Regulations ordinarily entails two elements: first, placing
the relevant instruments on the CCI’s record; and second,
explaining, either in the notice itself or in responses
furnished during review, the linkages by which those
instruments operate within the composite structure to
achieve the ultimate intended effect. Where these elements
are satisfied, the CCI is enabled to apply Regulation 9(5)
of the Combination Regulations and examine the
substance of the transaction, irrespective of the notifying
party’s descriptive label.
157. The respondents also contended that “mere filing” or
“mere annexing” of documents, or reference in footnotes,
cannot amount to disclosure, and that a valid notice must
not conceal material in the “crevices” of the record. As a
general proposition, disclosure is not a mechanical
checklist. However, the statutory test remains functional.
The question is whether the notice, read with the
contemporaneous clarifications sought and furnished
during review, placed the CCI in a position to examine the
connected arrangements in substance at the ex ante stage.
Where the CCI in fact issued requisitions, received
responses, and thereafter recorded in its approval order
the overlaps and relationships involving FRL, it is not open
to treat the same record as if it was unintelligible or
C.A. NO.4974 OF 2022 Page 76 of 154
effectively hidden from scrutiny. On these facts, the
“crevices” critique does not displace the conclusion that
the notice covered the inter-connected steps within the
meaning of Regulation 9(4) of the Combination
Regulations and enabled an assessment in s ubstance
within the meaning of Regulation 9(5) of the Combination
Regulations. Indeed, the Commission’s own conduct
during the statutory review, issuing requisitions and
receiving responses on FRL-linked rights, relationships,
and overlaps, demonstrates that the FRL-facing aspects of
the transaction were treated as part of the live record being
examined. Where the approval order itself records FRL-
linked overlaps and retail-market assessment, it is
untenable to suggest that the relevant interconnections
were “concealed in the crevices” of the filing. As this Court
has cautioned in State of Punjab v. Shamlal Murari
20,
‘processual law is not to be a tyrant but a servant…
procedural prescriptions are the handmaid and not the
mistress’. Therefore, once the regulatory record contained
the connected instruments and enabled an informed ex
ante review, alleged imperfections in presentation or
labelling cannot be elevated into non-notification. This is
not to condone concealment. It is to distinguish
concealment from a later dispute over characterisation
where the instruments were furnished, queried, and
analysed in the approval itself.
20
(1976)1 SCC 719
C.A. NO.4974 OF 2022 Page 77 of 154
158. The reasoning adopted by the CCI and affirmed by
the NCLAT under this issue proceeds, in substance, on the
assumption that if an agreement was not identified in a
particular manner, it was not comprehensively notified.
That approach elevates form over subs tance and is
inconsistent with the structure of Regulation 9(4) of the
Combination Regulations and Regulation 9(5) of the
Combination Regulations, particularly where the
contemporaneous record shows that the agreements and
their linkages were supplied and examined. This Court
has repeatedly warned against depriving a party of
substantive compliance by technicality, and against
construing regulatory requirements in a manner that
makes a fortress out of the dictionary. The focus must
remain on whether the decision-maker had the necessary
material to apply the law in substance as laid down in
Mangalore Chemicals and Fertilisers Ltd. v. CCT
21.
159. The respondents urged that the notice did not “cover”
the FRL SHA and the BCAs within the meaning of
Regulation 9(4) of the Combination Regulations because
the appellant did not characterise them as “transaction
documents” or as constituting part of the combination,
and in certain portions stated that the BCAs were not part
of the combination. This submission proceeds on an
unduly formal view of Regulation 9(4) of the Combination
Regulations. The regulation does not prescribe a
talismanic label. What it requires is that the inter-
21
(1992) Supp (1) SCC 21
C.A. NO.4974 OF 2022 Page 78 of 154
connected instruments and the linkages by which the
ultimate intended effect is to be achieved are brought on
record in the same notification and explained with
sufficient clarity to enable an ex ante assessment. A
statement that a particular agreement, viewed in isolation,
does not constitute a notifiable event under Section 5 of
the Act is, at the highest, a position on classification; it
does not amount to withholding, and it does not bind or
disable the CCI from examining the agreement as part of
the composite structure under Regulation 9(5) of the
Combination Regulations.
160. It was also urged that the CCI’s approval proceeded
on a limited understanding confined to a payments or
coupons dimension, and that the CCI therefore lacked the
opportunity to examine the transaction as one operating
in the retail sector. For the limited purpose of Issue (I), this
premise cannot be accepted because it is contradicted by
the CCI’s own contemporaneous approval order, which
records horizontal overlaps and vertical relationships
involving FRL and its group entities and reflects an
assessment undertaken with reference to the retail market
at an overall level. Where the CCI’s order itself evidences
engagement with the overlaps and relationships involving
FRL, it is not open to sustain, on this issue of
comprehensiveness of notification, that the connected
steps and agreements necessary for an informed review
were absent from the record. The relevant portions from
C.A. NO.4974 OF 2022 Page 79 of 154
the approval order dated 28.11.2019 have been
reproduced hereunder:
“13. With respect to the presence of Future Group and
certain Acquirer Affiliates in the business of B2C retail, the
Commission carried out the assessment at the overall India
retail market level, separately for the organised segment,
and within the organised segment separately for other
narrower segments. The Commission observed that the
presence of FRL and Acquirer Affiliates in overall B2C retail
or in any narrower segment stated above is not such as to
raise any competition concern. Therefore, the Proposed
Combination is not likely to raise any competition concern
and the exact relevant market definition is being left open.
…………………………..
14(e) The sales made by Future group entities including FRL
through third party online marketplaces (including Amazon
India Marketplace) are insignificant.
15. Considering the facts on record, details provided in the
notice given under sub-section (2) of Section 6 of the Act and
assessment of the proposed combination on the basis of
factors stated in sub-section (4) of Section 20 of the Act, the
Commission is of the opinion that the proposed combination
is not likely to have an appreciable adverse effect on
competition in India and therefore, the Commission hereby
approves the same under sub-section (1) of Section 31 of the
Act.”
C.A. NO.4974 OF 2022 Page 80 of 154
161. In view of the findings above, Issue (I) is answered in
favour of the appellant. On a proper construction of
Section 6(2) of the Act read with Regulation 9(4) and
Regulation 9(5) of the Combination Regulations, the
obligation is to place before the CCI, in a single notice, the
inter-connected steps and agreements that explain the
substance of the composite arrangement. On the basis of
the notice as filed, the subsequent clarifications, and the
contents of the approval order under Section 31(1) of the
Act, the appellant’s filing could not, in the circumstances
of the case, be treated as failing in substance to present a
composite notification of the inter -connected
arrangement. The contrary conclusion reached by the CCI
and affirmed by the NCLAT, on this limited question of
comprehensiveness and disclosure, cannot be sustained.
Issue (II): Whether the CCI and the NCLAT were correct in
holding that the appellant’s manner of notification and
disclosure, including the treatment of the FRL SHA and the
BCAs, amounted to a failure to notify the complete
combination as required by law, thereby attracting action
under Section 43A of the Act.
162. This issue concerns the threshold for invoking
Section 43A of the Act in a case where a notice under
Section 6(2) of the Act was admittedly filed, was processed
through the statutory review mechanism, and culminated
C.A. NO.4974 OF 2022 Page 81 of 154
in an approval under Section 31(1) of the Act. The CCI and
the NCLAT nevertheless held that the notification was, in
substance, of an incomplete combination, on the footing
that the FRL SHA and the BCAs were not notified as part
of the combination. The question is whether that approach
is consistent with the statutory scheme.
F.6. What Section 43A of the Act requires
163. Section 43A of the Act reads as follows:
“43A. Power to impose penalty for non-furnishing of
information on combination.—
If any person or enterprise fails to give notice to the
Commission under sub-section (2) of Section 6, the
Commission shall impose on such person or enterprise
a penalty which may extend to one percent, of the total
turnover or the assets, whichever is higher, of such a
combination..”
164. A perusal of Section 43A of the Act reveals that it is
a penal provision. Its jurisdictional foundation is the
statutory default of failure to give notice to the
Commission under Section 6(2) of the Act. Where the
allegation is not that no notice was filed at all, but that the
notice was “incomplete” in a structured transaction, the
inquiry must remain anchored to whether there was, in
substance, a failure to give notice of the combination as
required by Section 6(2) of the Act read with Regulation
9(4) and Regulation 9(5) of the Combination Regulations.
165. Because Section 43A of the Act is penal in character
and contemplates significant consequences, it must be
applied only where the statutory condition for its
invocation is established on the material before the CCI. It
C.A. NO.4974 OF 2022 Page 82 of 154
is not attracted merely because, in hindsight, the regulator
forms the view that the notice could have described
aspects of the transaction differently, or because the
regulator later prefers a different characterisation of
disclosed documents. It is true that the phrase “fails to
give notice” could, in an appropriate case, be invoked
where what is filed is not a notice of the combination in
substance. However, that construction cannot be applied
mechanically. The operative question is whether the notice
withheld an inter-connected step such that the
Commission was not seized of the transaction it was being
asked to clear.
166. The statutory scheme also reinforces the limited field
of Section 43A of the Act. The Act contains separate
provisions to address false statements, material
omissions, suppression, or furnishing incorrect
information in what is filed or furnished during th e
combination review, each with its own ingredients and
safeguards. Section 43A of the Act cannot be expanded
into a general penal provision for every asserted deficiency
in drafting, emphasis, or presentation in a notice that was
in fact filed, processed, and adjudicated.
167. Section 43A of the Act is a penal provision and must
therefore be applied only upon strict satisfaction of its
jurisdictional ingredients. Where a notice under Section
6(2) of the Act was filed and the CCI exercised its statutory
review culminating in an approval under Section 31(1) of
the Act prior to implementation, Section 43A of the Act
C.A. NO.4974 OF 2022 Page 83 of 154
cannot be expanded to punish a later disagreement on
how disclosed material ought to have been framed or
emphasised. The Act separately provides for consequences
for false statements and material omissions through
Sections 44 and 45 of the Act. Section 43A of the Act
cannot be converted into an omnibus penalty for every
alleged defect in narration.
F.7. The controversy that falls for determination under Issue
(II)
168. The controversy is narrow. The CCI and the NCLAT
did not proceed on the basis that no notice was filed. They
proceeded on the basis that what was notified was not the
“complete combination”, because the FRL SHA and the
BCAs were not notified as constituent elements of the
combination, and because certain parts of the notice
stated that the BCAs were not part of the combination. On
that footing, they treated the case as one of failure to notify
the combination in substance, and thus as attracting
Section 43A of the Act.
169. The question, therefore, is whether, in a case where
the relevant inter-connected agreements and steps were
placed on the CCI’s record and processed in a single review
culminating in an approval under Section 31(1) of the Act,
it is permissible to hold that there was a failure to notify
the combination so as to attract action under Section 43A
of the Act.
C.A. NO.4974 OF 2022 Page 84 of 154
F.8. Findings relevant to Section 43A of the Act
170. As already found while answering Issue (I), the
contemporaneous record of the Section 6(2) of the Act
proceeding demonstrates that the Form I notice, together
with the annexed executed instruments and the
clarifications furnished during review, placed on the CCI’s
record the FRL SHA and the BCAs which are now relied
upon as inter-connected steps of the composite
arrangement. The CCI did not treat the filing as a partial
or fragmented notification. It exercised its statutory review
function by issuing requisitions, receiving responses, and
then granting approval under Section 31(1) of the Act prior
to implementation. The appellant’s case before the NCLAT
was also that copies of all five BCAs were furnished, that
the rights and rationale under those arrangements were
disclosed, and that the FRL SHA itself carried an effective-
date linkage to receipt of the CCI’s approval. At the least,
therefore, the record does not support the proposition that
the Commission was asked to clear the transaction in
ignorance of the FRL-facing linkages and commercial
arrangements that are now said to have formed part of the
broader structure.
171. In these circumstances, the case cannot be treated
as one of failure to give notice merely because the
Commission later concluded that the appellant’s narrative
understated or legally distanced certain FRL -facing
arrangements. That species of disagreement does not
satisfy the jurisdictional premise for action under Section
C.A. NO.4974 OF 2022 Page 85 of 154
43A of the Act, which is confined to the statutory default
of failure to give notice under Section 6(2) of the Act. At
the most, the respondents’ case is one of alleged under-
emphasis, misdescription, or incomplete characterisation
in a notification that was nevertheless filed, processed,
and adjudicated. Allegations of that nature, if otherwise
made out on the statutory requirements, belong to the
field of Sections 44 and 45 of the Act. They do not, without
more, satisfy the narrower jurisdictional default
contemplated by Section 43A of the Act, namely failure to
give notice under Section 6(2).
172. There is also force in the appellant’s submission that,
viewed on its own, the acquisition of shares in FCPL was
asserted to fall within the small target exemption, and that
the combination was nevertheless notified because of the
wider FRL-linked structure and the inter-connected steps
presented with it. While that submission does not by itself
conclude the legal issue, it does sit uneasily with a later
characterisation of the case as one of avoidance of notice
or non-notification in substance. A party which comes
forward with a composite filing on the footing that the
wider FRL-linked structure warranted notification cannot,
without closer analysis, be treated as having sought to
evade notification altogether.
F.9. Errors in the reasoning of the CCI and the NCLAT
173. The approach adopted by the CCI and affirmed by the
NCLAT proceeds on an equation of “imperfect
C.A. NO.4974 OF 2022 Page 86 of 154
characterisation” with “non-notification”. That equation is
inconsistent with the structure of Section 6(2) of the Act
read with Regulation 9(4) and Regulation 9(5) of the
Combination Regulations. Regulation 9(4) of the
Combination Regulations requires a single notice covering
the inter-connected steps by which the ultimate intended
effect is achieved. Regulation 9(5) of the Combination
Regulations requires an examination based on substance
and directs that avoidance structures be disregarded.
Where the documents and linkages are placed before the
CCI in a single proceeding, the statutory purpose is
served. Section 43A of the Act cannot be invoked merely
because the CCI later considers that the notifying party
should have described the same documents in different
terms.
174. The respondents sought to sustain the impugned
conclusion on the footing that the FRL SHA and the BCAs
were not “notified as part of the combination”, since they
were not characterised as “transaction documents” and
because the notice contained statements that the BCAs
were not part of the combination. This submission does
not engage with the correct statutory inquiry. For Section
43A of the Act, the question is whether there was a failure
to notify the combination in substance, not whether every
inter-connected instrument was labelled in a particular
manner. Regulation 9(5) of the Combination Regulations
expressly cautions against a form-driven approach. It is
also significant that the CCI, as the statutory decision-
C.A. NO.4974 OF 2022 Page 87 of 154
maker, was never bound by the notifying party’s
characterisation and remained obliged to examine the
substance of the transaction and its practical operation.
Where the agreements were furnished and the CCI
proceeded to analyse overlaps and relationships and to
grant approval, it is not open to treat the same filing as a
failure to notify.
175. The CCI and the NCLAT also appear to have
proceeded on the assumption that the notice is incomplete
unless each inter-connected agreement is treated as an
independent notifiable event. That assumption is directly
inconsistent with Regulation 9(4) of the Combination
Regulations itself, which contemplates that one or more
inter-connected steps may amount to a combination, and
yet requires a single notice covering all inter-connected
steps. The regulation is concerned with completeness of
presentation, not with transforming every connected
agreement into a separate notifiable trigger. The record
demonstrates that the connected steps and instruments
were placed before the CCI in one notice and were
processed as one review. On that footing, the case does not
satisfy the statutory premise for action under Section 43A
of the Act.
F.10. Reliance on Thomas Cook and SCM Solifert
C.A. NO.4974 OF 2022 Page 88 of 154
176. The respondents placed reliance on the decisions in
Competition Commission of India v. Thomas Cook
(India) Limited & Anr.,
22
and SCM Solifert Limited &
Anr. v. Competition Commission of India
23, to contend
that merger control is concerned with substance, and that
the CCI is entitled to prevent parties from defeating the
notification regime by fragmentation, labels, or step-wise
structuring. There is no dispute with the general
proposition. Regulation 9(4) and Regulation 9(5) of the
Combination Regulations embody that principle. However,
the application of that principle depends upon the factual
setting in which the transaction was notified, reviewed,
and implemented. The ratio of these decisions cannot be
extended to treat a filed and approved notice as a “failure
to give notice” under Section 6(2) of the Act, merely
because the CCI later prefers a different interpretive
emphasis on materials that were before it at the time of
review.
177. In Thomas Cook (supra), the Court was dealing with
a transaction structure where the regulatory concern was
that the ex ante architecture of Section 6(2) of the Act
would be defeated if notifiable acquisition steps could be
treated as insulated from scrutiny by being described as
separate or sequential, or by being implemented in a
manner that deprived the CCI of a meaningful opportunity
to examine the combination before it took effect. The
22
(2018) 6 SCC 549
23
(2018) 6 SCC 631
C.A. NO.4974 OF 2022 Page 89 of 154
principle applied there was that parties cannot rely on
formal separation of steps to defeat prior scrutiny of a
composite transaction. The present case is materially
different. Here, a notice under Section 6(2) of the Act was
filed. The CCI exercised its statutory review function by
calling for information and receiving responses. The CCI
then granted approval under Section 31(1) of the Act
before the combination was implemented. The
foundational mischief addressed in Thomas Cook (supra),
namely the frustration of prior scrutiny by implementation
outside the clearance framework, is therefore absent. It is
in that setting, where prior scrutiny is frustrated by
structuring or sequencing, that the conduct is treated as
a failure to give notice in substance for the purposes of
Section 43A of the Act.
178. In SCM Solifert (supra), the decision is invoked to
emphasise Regulation 9(4) and Regulation 9(5) of the
Combination Regulations. The controlling concern there
was that when the “ultimate intended effect” is achieved
through inter-connected steps, the CCI must be placed in
possession of the composite arrangement at the
notification stage, and parties cannot avoid scrutiny by
isolating one step and treating the remainder as unrelated.
The present case does not attract that concern. As
analysed under Issue (I ), the agreements and
arrangements now said to be relevant to the composite
picture, including the FRL SHA and the BCAs, were
available on the CCI’s record in the same Section 6(2) of
C.A. NO.4974 OF 2022 Page 90 of 154
the Act proceeding which culminated in approval under
Section 31(1) of the Act. The respondents’ contention, at
its highest, is that the notifying party’s narrative did not
characterise the inter-connection with sufficient
emphasis, or that the CCI, in hindsight, would have
approached the same disclosed record differently. That
type of dispute about characterisation does not convert a
processed and approved notice into a case of failure to give
notice under Section 6(2) of the Act for the purposes of
Section 43A of the Act. That is the mischief to which
Regulation 9(4) and Regulation 9(5) are directed, and it is
only where that mischief exists that the conduct can be
characterised as failure to give notice in substance for
Section 43A of the Act.
179. To accept the respondents’ reliance on these
precedents for invoking Section 43A of the Act on the facts
here would also distort the statutory scheme. Chapter VI
draws a clear distinction between defaults of notice
addressed by Section 43A of the Act and false statements
or material omissions in what is furnished addressed by
Section 44 of the Act and Section 45 of the Act. If every
later disagreement about framing, or every asserted
inadequacy in how disclosed material was described,
could be treated as a failure to give notice, Section 43A of
the Act would become an elastic penal provision capable
of being invoked even where notice was filed, scrutinised,
and approved. That is neither what Thomas Cook (supra)
or SCM Solifert (supra) decide, nor what the text of
C.A. NO.4974 OF 2022 Page 91 of 154
Section 43A of the Act permits. These decisions prevent
avoidance of notice and prior scrutiny through
fragmentation. They do not authorise treating a filed and
approved notice as no notice merely because the CCI later
views the same record through a different analytical lens.
180. In view of the findings above, Issue (II) is answered in
favour of the appellant. The CCI and the NCLAT were not
correct in treating the appellant’s manner of notification
and disclosure, in the circumstances of this case, as a
failure to notify the complete combination so as to attract
action under Section 43A of the Act. The statutory
condition for invoking Section 43A of the Act was not
satisfied on the contemporaneous regulatory record. If
there remained any arguable complaint, it had to be
tested, if at all, within the stricter and more specific
framework governing false statements and material
omissions, and not by converting a processed notification
into a case of non-notification. If Issue (II) concerns the
legal sufficiency of the notification as filed, Issue (III)
concerns a distinct question, namely whether the contents
of that filing and the non-furnishing of certain internal
materials attract the penal consequences contemplated
under Section 44 of the Act and Section 45 of the Act.
Issue (III): Whether the findings of suppression, omission,
and misrepresentation recorded against the appellant,
including in relation to Item 5.3 and Item 8.8 of Form I and
the responses furnished during review, attract the
requirements of Section 44 of the Act and Section 45 of the
Act.
C.A. NO.4974 OF 2022 Page 92 of 154
181. This issue concerns the correctness of the
conclusions reached by the CCI and the NCLAT that the
appellant suppressed material information and made
misrepresentations during the combination review, and
that such conduct attracted penalty under Section 44 of
the Act and Section 45 of the Act. The gravamen of the
impugned findings is that certain internal documents and
communications were not disclosed with the Form I filing,
and that the disclosures made in Form I, including in
response to Item 5.3 of Form I and Item 8.8 of Form I, and
in responses furnished during review, were either
incomplete or misleading.
F.11. What Section 44 of the Act and Section 45 of the Act
require
182. Section 44 of the Act and Section 45 of the Act
have been reproduced hereunder:
“44. Penalty for making false statement or
omission to furnish material information.—
If any person, being a party to a combination,—
(a) makes a statement which is false in any material
particular, or knowing it to be false; or
(b) omits to state any material particular knowing it to
be material,
such person shall be liable to a penalty which shall not
be less than rupees fifty lakhs but which may extend
to rupees one crore, as may be determined by the
Commission.
45. Penalty for offences in relation to furnishing
of information
(1) Without prejudice to the provisions of Section 44, if
a person, who furnishes or is required to furnish under
this Act any particulars, documents or any
information,—
C.A. NO.4974 OF 2022 Page 93 of 154
(a) makes any statement or furnishes any document
which he knows or has reason to believe to be false in
any material particular; or
(b) omits to state any material fact knowing it to be
material; or
(c) wilfully alters, suppresses or destroys any
document which is required to be furnished as
aforesaid,
such person shall be punishable with fine which may
extend to rupees one crore as may be determined by
the Commission.
(2) Without prejudice to the provisions of sub-section
(1), the Commission may also pass such other order as
it deems fit.”
183. Section 44 draws two distinct routes:
(a) a statement which is false in any material particular;
or a statement made knowing it to be false; and
(b) omission to state a material particular knowing it to be
material.
Accordingly, for Section 44(a), the inquiry is whether
either limb is established on the record: (i) material falsity,
or (ii) knowing falsity. For Section 44(b), the inquiry is
whether a material particular was omitted with knowledge
of its materiality.
184. Section 45(1) of the Act is wider in its reach and is
framed “without prejudice” to Section 44 of the Act. It
applies to any person who furnishes or is required to
furnish, under the Act, any particulars, documents, or
information. It is attracted where such person makes a
statement or furnishes a document which the person
knows or has reason to believe to be false in any material
C.A. NO.4974 OF 2022 Page 94 of 154
particular, or omits to state any material fact knowing it
to be material. Section 45(1) of the Act also targets an
additional and aggravated category of conduct, namely the
wilful alteration, suppression, or destruction of any
document which is required to be furnished. Section 45(2)
of the Act empowers the CCI to pass such other order as
it deems fit, but that consequential power presupposes
that the conditions under Section 45(1) of the Act are first
satisfied.
185. Both Section 44 of the Act and Section 45 of the Act
are penal provisions. Their invocation must rest on a
precise and reasoned finding that the statutory
ingredients are satisfied on the material before the CCI.
These provisions are not attracted merely because the
regulator later prefers a different description, emphasis, or
analytical framing of information that was otherwise
disclosed. They require the CCI to identify the specific
statement said to be false or the specific particular or fact
said to have been omitted, to explain why it was material
in the context of the statutory review, and, where the
statute so requires, to record a clear finding on the
requisite state of mind. In penal adjudication, the CCI
must record clear reasons. The “face of an order” must
speak or otherwise it becomes an “inscrutable face of a
sphinx” as held by this Court in Kranti Associates (P)
Ltd. v. Masood Ahmed Khan
24.
24
(2010) 9 SCC 496
C.A. NO.4974 OF 2022 Page 95 of 154
186. The statutory mental element and the materiality
requirement must be kept distinct for each limb. Under
Section 44(a), liability may arise if the party either makes
a statement which is false in any material particular, or
makes a statement knowing it to be false. Under Section
44(b), liability arises where the party omits to state a
material particular, knowing it to be material. Under
Section 45(1)(a), the statute requires that the person
knows or has reason to believe that the statement or
document furnished is false in any material particular.
Under Section 45(1)(b), the statute requires omission of a
material fact, knowing it to be material. Under Section
45(1)(c), the statute requires wilful alteration, suppression
or destruction of a document which is required to be
furnished. The expression “suppression”, and a fortiori
“wilful suppression”, imports a deliberate act and cannot
be equated with inadvertent non-production or with a
dispute as to relevance unless the document is first shown
to be one that the statute or the prescribed filing
framework required to be furnished.
187. In combination proceedings, materiality must be
assessed with reference to the CCI’s statutory function. A
statement or omission is material only if it bears a rational
nexus to the CCI’s ex ante assessment of the combination
and its decision under Section 31(1) of the Act. An
omission of information not required by the Act or the
statutory filing framework, or information that does not
bear upon the competitive assessment the CCI is required
C.A. NO.4974 OF 2022 Page 96 of 154
to undertake, cannot be treated as a material omission for
the purposes of imposing penalty.
188. It follows that a non-disclosure cannot be elevated
into a penal omission merely because, in hindsight, the
authority considers the omitted matter useful or
illuminating. The matter omitted must first be shown to
be one which the Act, the Rules, the Regulations, or the
prescribed filing framework required to be disclosed in the
circumstances of the case. Absent that threshold showing,
the foundation for invoking Sections 44 and 45 becomes
correspondingly weak. This assumes added significance
where the respondents seek to characterise the conduct
as amounting, in substance, to fraud on a statutory
authority.
189. Where both Section 44 of the Act and Section 45 of
the Act are invoked on the same factual foundation, the
CCI must also articulate the distinct basis on which each
provision is attracted. Section 44 of the Act is a specific
provision directed at false statements and material
omissions by parties to a combination in the combination
process. Section 45 of the Act is a general provision
applicable to persons who furnish or are required to
furnish information under the Act, and it additionally
addresses wilful alteration, suppression, or destruction of
required documents. The statutory scheme does not
support overlapping penal consequences for the same
alleged misstatement or omission without demonstrating
C.A. NO.4974 OF 2022 Page 97 of 154
distinct statutory ingredients and a clear field of operation
for each provision.
F.12. The controversy that falls for determination under Issue
(III)
190. The CCI and the NCLAT proceeded on the basis that
certain internal documents and communications, which
were not furnished with the Form I filing, revealed an
intent and structure that was allegedly inconsistent with
the disclosures made to the CCI. They he ld that this
amounted to suppression and misrepresentation,
including in relation to Item 5.3 of Form I and Item 8.8 of
Form I, and that penalties under Section 44 of the Act and
Section 45 of the Act were warranted. The controversy
therefore turns on whether, on the contemporaneous
record of the filing and the review, the non-furnishing of
those internal documents, or the manner in which the
Form I responses were framed, can properly be
characterised as suppression or misrepresentation of a
material nature, so as to attract Section 44 of the Act and
Section 45 of the Act.
F.13. Internal communications relied upon by the Commission
191. Since the impugned findings under Section 44 and
Section 45 rest in substantial measure upon internal
communications of the appellant, it is appropriate to
notice the relevant contents of those communications in
some detail. The Commission relied upon them to contend
C.A. NO.4974 OF 2022 Page 98 of 154
that the transaction, though outwardly presented as an
investment in FCPL, was internally conceived as a
strategic arrangement directed at FRL and its retail
business. The appellant, in contrast, argued that the
earlier communications related to alternativ e or
exploratory structures, and that the finally executed
transaction documents and the notice filed before the
Commission constituted the legally relevant record.
192. The internal material relied upon by the Commission
includes the statement that Amazon was not permitted to
make direct FDI investment in FRL without Government
approval and that, if such direct investment were made,
Amazon’s Indian affiliates could not enter into BCAs with
FRL for sale of FRL’s products on Amazon’s marketplace
platform; it then records that “Amazon would like a ‘Foot-
in-the-door’.” The same material further states that
Amazon has “strategic interest over FRL’s retail business
and assets” and that the rationale for investment in FCPL
included: acquisition of “material and strategic rights over
FRL”; entry into various BCAs under which FRL products
would be sold on the marketplace platform of Amazon’s
India affiliate; acquisition of an indirect shareholding in
FRL; acquisition of a call option to acquire FRL shares
from the Biyanis when regulations permit; and, “in
essence”, that the strategic interest of Amazon was “over
the retail business and assets of FRL.” It additionally
records that Amazon “neither has any interest in FCPL nor
is the business of FCPL of relevance to Amazon”, that
C.A. NO.4974 OF 2022 Page 99 of 154
Amazon was investing in FCPL “with a view to indirectly
investing in FRL”, that the entire sum of INR 1431 crores
invested in FCPL had to be permanently invested by FCPL
in FRL so that Amazon indirectly acquired 9.82 percent
shareholding in FRL, that no value was attributed to the
gift card and coupons business of FCPL, and that Amazon
was paying a premium of 25 percent over the market price
of FRL shares “for the strategic rights” being acquired over
FRL through the proposed combination.
193. The Commission also relied on the 10.07.2018
internal email, which was said to describe FRL as one of
the key players in the offline retail market to partner with,
to identify strategic objectives including the ability to
become the single largest shareholder in FRL when
permissible, the preclusion of competitive interest in FRL,
and entry into commercial arrangements to bolster the
appellant’s ultra-fast delivery programme, as well as the
strategic rights expected to be obtained in relation to the
“Foot-in-the-door” objective.
194. Further, the internal email dated 19.07.2019 was
relied upon to show that the proposed structure was
conceived as a “twin entity” structure whereby the
appellant would acquire 49 percent stake in FCPL and
FCPL would acquire 8 to 10 percent of FRL; that the
number of FRL shares to be held by FCPL had been
calculated such that the appellant could indirectly hold
the same number of FRL shares that it would have
acquired through a direct investment route; that the 25
C.A. NO.4974 OF 2022 Page 100 of 154
percent premium was paid on account of the strategic
rights and call option being provided; and that the
appellant would obtain indirect control over FRL through
the consent structure operating between Amazon, FCPL
and FRL.
195. These communications are plainly relevant. They
cannot be ignored merely because they are internal
materials. They do tend to show that, within the
appellant’s internal deliberative process, the transaction
was viewed in broader strategic terms than the restrained
language used in some parts of the notice and responses.
In that sense, they provide an intelligible basis for the
Commission’s concern that the transaction had a wider
commercial setting involving FRL and the BCAs. At the
same time, relevance is not the same as conclusiveness.
The question under Section 44 and Section 45 is not
whether internal communications used expansive
commercial language, but whether the notice and
accompanying material, read with the executed
agreements and the responses furnished during review,
contained a materially false statement or omitted a
material particular required by law.
196. The evidentiary force of these communications must
therefore be assessed with care. The 2018 materials are,
at the least, open to the appellant’s contention that they
related to a period when multiple structures, including a
direct investment route in FRL, were under exploration
and were not finally adopted. The appellant’s case, more
C.A. NO.4974 OF 2022 Page 101 of 154
specifically, is that the finally adopted structure differed
from what those earlier materials contemplated. The
communication dated 19.07.2019 stands on a somewhat
different footing because it is closer in time to the finally
adopted structure. Yet even i n relation to that
communication, the appellant’s case is not one of simple
denial, but that the substance of that email stood reflected
in the finally executed agreements and in the disclosures
furnished to the Commission. The decisive legal inquiry
therefore remains whether the non-furnishing of that
internal communication rendered the actual notice and
responses materially false or materially incomplete in the
statutory sense. On that inquiry, the communications,
though relevant, do not by themselves dis charge the
burden of establishing penal suppression or
misrepresentation within the meaning of Sections 44 and
45 of the Act.
F14. Timing of the internal communications and the
executed transaction documents
197. There is also an important temporal aspect to the
internal communications relied upon by the Commission.
The communications dated 24.05.2018, 10.07.2018 and
19.07.2019 all preceded the execution of the principal
transaction documents. The FRL SHA was execu ted on
12.08.2019, while the FCPL SSA and the FCPL SHA were
executed on 22.08.2019. The notice under Section 6(2) of
the Act was thereafter filed on 23.09.2019. The internal
communications were therefore anterior to the binding
C.A. NO.4974 OF 2022 Page 102 of 154
instruments through which the parties ultimately
recorded their rights and obligations.
198. This timing does not render the internal
communications irrelevant. They may illuminate the
commercial thinking of the appellant and may be
considered where the statutory filing framework requires
disclosure of material internal documents. However, their
evidentiary value must be calibrated with care.
Commercial negotiations often involve the exploration of
alternative structures, regulatory routes, economic models
and strategic objectives before the parties settle upon the
final contractual form. Penal liability under Sections 44
and 45 of the Act cannot rest merely on treating pre-
execution internal formulations as the transaction itself,
unless it is further shown that the final agreements and
the notification materially concealed, contradicted, or
misrepresented the operative rights and commercial
linkages actually created.
199. The controlling record for combination review must
therefore remain the executed transaction structure
placed before the Commission, the rights and obligations
arising under that structure, the notice and responses
furnished during review, and the approval order passed on
that basis. Pre-execution communications may provide
context against which the adequacy of disclosure is tested.
They cannot, by themselves, displace the statutory
inquiry. The question remains whether any material
particular required to be stated was omitted, whether any
C.A. NO.4974 OF 2022 Page 103 of 154
statement made was false in a material particular,
whether any document required to be furnished was
wilfully suppressed, and whether the mental element
prescribed by Sections 44 and 45 of the Act was
established.
F.15. Findings on the contemporaneous record
200. The assessment under this issue must begin, and
remain anchored, in the contemporaneous record of the
Section 6(2) of the Act proceeding, as summarised while
answering Issue (I). The executed instruments and inter-
connected arrangements relied upon by the respondents
were on the CCI’s record at the stage of statutory review.
The CCI called for and received clarifications before
passing the approval order under Section 31(1) of the Act.
The allegations of suppression, omission, or
misrepresentation must therefore be tested against (i)
what the statutory filing framework required to be
furnished, (ii) what was in fact furnished, and (iii) whether
any asserted deficiency satisfies the statutory ingredients
of Section 44 of the Act and Section 45 of the Act, rather
than against a hindsight assessment of how the same
record might now be characterised.
F.16. Item 5.3 of Form I: purpose and rationale
201. The internal communications noticed above do show
that, within the appellant’s internal assessment process,
the transaction could be described in commercially
broader terms than the language used in certain portions
C.A. NO.4974 OF 2022 Page 104 of 154
of the notice. However, the statutory inquiry under Item
5.3 is not whether internal communications used stronger
language, but whether the purpose and rationale required
by law to be stated were expressed in a manner that
amounted to a materially false statement or a materially
culpable omission for the purposes of Sections 44 and 45
of the Act. For that purpose, the final transaction
documents, the rights actually obtained thereunder, the
inter-connected arrangements disclosed, and the
responses furnished during review are of greater legal
significance than internal formulations viewed in
isolation.
202. On the contemporaneous record, the executed
agreements and the rights flowing from them were before
the Commission, and the Commission’s own approval
order shows that it undertook retail-market assessment
involving FRL and the relevant Amazon affiliates. In such
a setting, the internal articulations relied upon by the
Commission may at best suggest that the appellant’s
internal commercial thinking was broader or more direct
in tone than the restrained formulation adopted in the
notice. They do not, without a more exact statutory
showing, establish that the notice affirmatively misstated
the rights actually being acquired under the executed
structure, or that any omission in the statement of
rationale was shown to be materially capable of vitiating
the Commission’s ex ante assessment in the manner
required for penal action.
C.A. NO.4974 OF 2022 Page 105 of 154
F.17. Item 8.8 of Form I: documents required to be furnished
203. Item 8.8 is not to be treated as a boundless obligation
requiring production of every internal email, negotiation
trail, or preliminary working paper generated during the
life of a transaction. Its purpose is to secure such internal
materials as bear materially on the combination as
notified and on the Commission’s assessment of that
combination under the Act. The existence of internal
materials, even those containing expansive commercial
formulations, does not by itself justify penal
consequences. It must still be shown that the omitted
materials were within the scope of what the filing
framework required to be furnished, that their non -
furnishing rendered the filing materially false or
incomplete in relation to the statutory review actually
undertaken, and that the requisite mental element under
Sections 44 and 45 stood established.
204. In the present case, the difficulty in sustaining the
penal findings lies in the absence of a sufficiently reasoned
demonstration by the Commission that the omitted
internal materials were documents required to be
furnished in the circumstances; that their non-furnishing
rendered the notice or subsequent responses materially
false or materially incomplete in relation to the statutory
assessment; and that the distinct ingredients of Sections
44 and 45, including materiality and the applicable mental
element, stood established. The mere existence of
C.A. NO.4974 OF 2022 Page 106 of 154
additional internal materials, including materials
reflecting preliminary or abandoned alternatives, cannot
by itself justify penal consequences. This conclusion is
reinforced where the internal materials preceded the
execution of the binding transaction documents, and the
Commission has not shown why such pre -execution
deliberations remained independently material despite the
subsequent execution and disclosure of the operative
agreements.
F.18. Materiality and the statutory mental element
205. This brings the inquiry back to the responses
furnished in Form I, including under Item 5.3 and Item
8.8, and to the responses furnished during review. The
mere fact that the CCI subsequently formed the view that
additional internal materials ought to have been furnished
does not, by itself, establish that any answer actually
furnished was false in a material particular, or that there
was an omission of a material particular or material fact
within the meaning of Sections 44 and 45 of the Act. A
penal conclusion requires a demonstrable mismatch
between what was required to be disclosed, what was
disclosed, and what was withheld. It further requires a
reasoned finding as to why the alleged omission or
falsehood was material to the statutory review.
206. Some of the passages later relied upon by the
Commission as evidence of a payments-centred narrative
were, in fact, answers to pointed CCI queries directed
C.A. NO.4974 OF 2022 Page 107 of 154
specifically to FCPL’s coupons / payments business, or
formed part of a statutorily constrained summary. If that
be so, those answers could not fairly be lifted out of
context and treated as defining the entirety of the notified
combination or as negating the broader retail-side
disclosures elsewhere in the record. In proceedings under
Sections 44 and 45 of the Act, context is not incidental; it
is central to the inquiry whether any particular statement
was false in a material particular.
207. Materiality is also relevant from another perspective.
The CCI’s contemporaneous approval order reflects that it
undertook an assessment on the basis of the parties and
their group entities, the overlaps and relationships
identified, and the disclosed commercial arrangements. In
such a situation, a finding of misrepresentation cannot
rest on internal phrasing unless the authority
demonstrates why that internal material bore a rational
nexus to, and was reasonably capable of influencing, the
statutory AAEC assessment and the decision under
Section 31(1) of the Act on the combination as notified.
The impugned reasoning does not establish such nexus
with the specificity expected in penal adjudication.
208. This aspect is reinforced by the Commission’s own
approval order dated 28.11.2019. That order records, in
express terms, horizontal overlaps and vertical
relationships involving FRL and Acquirer Affiliates,
undertakes assessment in the overall India retail market,
and notes FRL-linked sales through third party online
C.A. NO.4974 OF 2022 Page 108 of 154
marketplaces. The contemporaneous approval record
therefore materially weakens the premise that the alleged
omissions prevented the Commission from examining the
FRL-facing dimensions of the transaction at the ex ante
stage.
209. A further distinction is necessary. The
communications of 2018 are considerably weaker as a
foundation for penal liability if, as the appellant contends,
they related to an earlier phase in which multiple
structures, including a direct investment route in FRL,
were under examination and were not finally adopted. The
communication dated 19.07.2019 is closer to the finally
adopted structure and therefore cannot be brushed aside
on the same footing. Even so, the legal question remains
whether the final notice, the annexed agreements, and the
subsequent responses materially concealed the operative
rights and commercial linkages which that email is said to
reflect. On that question, the contemporaneous review
record weighs heavily against a finding that the
Commission was disabled from assessing the FRL-facing
dimensions of the transaction.
210. Equally, the impugned order uses broad language of
knowledge and suppression, but does not sufficiently
particularise how the statutory ingredients were met
separately for each impugned statement, omission, and
document. Under Section 44(a), liability may arise if the
party either makes a statement which is false in any
material particular, or makes a statement knowing it to be
C.A. NO.4974 OF 2022 Page 109 of 154
false. Under Section 44(b), liability arises where the party
omits to state a material particular, knowing it to be
material. Under Section 45(1)(a), the statute requires that
the person knows or has reason to believe that the
statement or document furnished is false in any material
particular. Under Section 45(1)(b), the statute requires
omission of a material fact, knowing it to be material.
Under Section 45(1)(c), the statute requires wilful
alteration, suppression or destruction of a document
which is required to be furnished. A penal conclusion
cannot be sustained on insinuation or on a broad
inference of “lack of candour” without a specific finding,
supported by reasons, meeting these statutory
ingredients. Penalty is not an automatic consequence. It is
quasi-criminal in nature and is not ordinarily imposed
unless the party acted deliberately in defiance of law or
was guilty of dishonest conduct; it must also be noted that
a bona fide belief negates penal consequences as held by
this Court in Hindustan Steel Ltd. v. State of Orissa
25.
A broad inference of “lack of candour”, unaccompanied by
a precise finding on falsity, materiality, requirement of
disclosure, and the relevant state of mind, is insufficient
to sustain penalty under these provisions.
F.19. Errors in the approach of the CCI and the NCLAT
211. The CCI and the NCLAT were entitled to treat the
internal communications as relevant surrounding
25
(1969) 2 SCC 627
C.A. NO.4974 OF 2022 Page 110 of 154
material. However, they proceeded further to equate
internal deliberations with the notified transaction itself,
to equate differences in descriptive characterisation with
statutory falsehood, and to equate non-furnishing of those
materials, including materials pertaining to structures not
finally adopted, with penal suppression, without a
sufficiently exact demonstration of statutory materiality.
Each step in that chain is legally unsound for the purpose
of applying Section 44 of the Act and Section 45 of the Act.
212. First, the combination review is grounded in the
executed transaction structure and the operative rights
and linkages created thereby. The filing record shows that
the executed agreements and the rights under them were
furnished. Where the CCI had those ag reements and
undertook review on that basis, it is not permissible to
treat the filing as vitiated by misrepresentation unless
there is a clear finding that the filing affirmatively
misstated the existence or nature of those rights, or
omitted a material right or linkage that the CCI was
required to examine.
213. Second, the approach adopted in the impugned
decisions places undue emphasis on labels. A party may
describe rights as protective or strategic, but the decisive
question for the CCI’s purposes remains whether the
rights were disclosed and whether their com petitive
implications were capable of assessment. Section 44 of the
Act and Section 45 of the Act are not triggered by
disagreements over nomenclature. They are triggered by
C.A. NO.4974 OF 2022 Page 111 of 154
false statements or omissions of material particulars.
Where the rights and linkages are disclosed and annexed
through executed agreements, a subsequent difference in
analytical characterisation does not transform disclosure
into misrepresentation. On these facts, Section 44(a) is not
attracted on either limb as the Approval Order itself
records that the Commission assessed FRL overlaps in
B2C retail and noted FRL-linked online marketplace sales
(para 13; para 14(e)), and approved under Section 31(1)
(para 15). That contemporaneous engagement negatives
the premise of a materially false portrayal that prevented
retail-side assessment.
214. Third, the impugned reasoning does not establish,
with reasons, that any identified omission or statement
under Item 5.3 of Form I or Item 8.8 of Form I was material
in the statutory sense. Nor does it return a specific finding
satisfying the mental element required by Section 44 of the
Act and Section 45 of the Act. In penal proceedings, it is
not sufficient to state that certain internal documents
existed and were not filed. The CCI must show that the
filing framework required their furnishing in the
circumstances, that the answers given were false or
incomplete in a material manner, and that the omission
affected the CCI’s ability to perform its statutory review.
Those steps are not established.
215. Fourth, the imposition of penalties under Section 44
of the Act and Section 45 of the Act on an overlapping
factual foundation, without a clear delineation of how each
C.A. NO.4974 OF 2022 Page 112 of 154
provision is independently attracted, results in an
approach that is not faithful to the statutory scheme.
Penal liability cannot be imposed in the abstract, and it
cannot be multiplied by invoking general provisions where
the field is already occupied by a specific provision
addressing the notice process.
216. Finally, insofar as the impugned findings rely on
materials introduced after the initiation of proceedings, it
becomes necessary to ensure that the party against whom
penalty is proposed was put to the precise case and had a
fair opportunity to meet it. That aspect is considered
separately while answering Issue (VI). Even on the merits
of Issue (III), however, the impugned findings do not
establish the statutory ingredients of Section 44 of the Act
and Section 45 of the Act.
217. In view of the findings above, Issue (III) is answered
in favour of the appellant. The contemporaneous filing and
review record, read with the impugned reasoning, does not
sustain the conclusion that the statutory ingredients of
false statement, material omission, or wilful suppression
were established against the appellant in the manner
required by Section 44 of the Act and Section 45 of the Act.
The CCI and the NCLAT proceeded on an unduly
expansive understanding of these penal provisions, and on
a conflation of internal deliberations and descriptive
characterisations with statutory misrepresentation. The
fact that the impugned internal communications predated
the binding transaction documents further reinforces the
C.A. NO.4974 OF 2022 Page 113 of 154
conclusion that they could provide context, but could not
by themselves substitute the statutory inquiry into the
executed agreements, the notice, the responses furnished
during review, and the approval record. The findings of
suppression, omission, and misrepresentation recorded
against the appellant, insofar as they form the basis for
action under Section 44 of the Act and Section 45 of the
Act, cannot be sustained.
Issue (IV): Whether, and to what extent, the proviso to
Section 20(1) of the Act bears upon the CCI’s authority to
initiate and conclude proceedings of the present nature,
having regard to the basis on which the show cause notice
dated 04.06.2021 was issue d and the character of the
proceedings which culminated in the order dated
17.12.2021.
218. This issue concerns the relationship between finality
in combination control and the CCI’s power to revisit an
approved and consummated transaction after the passage
of time. The show cause notice dated 04.06.2021 was
issued long after the CCI had granted approval under
Section 31(1) of the Act, and after the transaction had been
given effect to. The proceedings culminated in the order
dated 17.12.2021 which, apart from imposing penalties,
also purported to disturb the earlier approval by directing
that the approval order be kept in abeyance and by
requiring the filing of a fresh notice. The question is
whether such proceedings, in substance and effect, are
constrained by the limitation contained in the proviso to
Section 20(1) of the Act.
C.A. NO.4974 OF 2022 Page 114 of 154
F.20. What the proviso to Section 20(1) of the Act requires
219. Section 20(1) of the Act is reproduced here for
reference:
“20. Inquiry into combination by Commission.
(1) The Commission may, upon its own knowledge or
information relating to acquisition referred to in clause
(a) of Section 5 or acquiring of control referred to in
clause (b) of Section 5 or merger or amalgamation
referred to in clause (c) of that section, inquire into
whether such a combination has caused or is likely to
cause an appreciable adverse effect on competition in
India:
Provided that the Commission shall not initiate any
inquiry under this sub-section after the expiry of one
year from the date on which such combination has
taken effect.”
220. Section 20(1) of the Act is the provision under which
the CCI enquires into whether a combination has caused,
or is likely to cause, an appreciable adverse effect on
competition in India. The proviso to Section 20(1) of the
Act places an express outer limit on that power. It provides
that the CCI shall not initiate any inquiry under Section
20(1) of the Act after the expiry of one year from the date
on which such combination has taken effect.
221. The proviso to Section 20(1) of the Act is not a mere
procedural guideline. It is a jurisdictional limitation
enacted to ensure that combinations, once approved and
implemented, are not left indefinitely exposed to re-
opening on the merits. The combination regime is
designed to function ex ante. The statutory architecture
C.A. NO.4974 OF 2022 Page 115 of 154
proceeds on the basis that combinations are to be notified
under Section 6(2) of the Act, assessed by the CCI, and
either approved, modified, or prohibited under Section 31
of the Act, before they are given effect to. The proviso to
Section 20(1) of the Act provides certainty and finality after
implementation, by limiting the period within which the
CCI may initiate an inquiry on the competition merits
under Section 20(1) of the Act.
222. The limitation contained in the proviso to Section
20(1) of the Act cannot be defeated by characterising what
is, in substance, an inquiry into the combination as
something else. The principle is well settled that what
cannot be done directly cannot be permitted to be done
indirectly. If proceedings commenced after the expiry of
one year have, as their practical effect, the reopening of
the competitive assessment of a consummated
combination, or the undoing of a prior approval so as to
require a fresh substantive review, the bar in the proviso
to Section 20(1) of the Act would be rendered illusory. The
statutory prohibition, therefore, must be given effect
according to substance and not form.
223. This does not mean that the CCI is powerless to
address every form of misconduct after one year. The Act
contains specific penal provisions, including Section 44 of
the Act and Section 45 of the Act, which operate in their
own field and are triggered by th eir own statutory
ingredients. The point, however, is that those provisions
cannot be used as a route to achieve what the proviso to
C.A. NO.4974 OF 2022 Page 116 of 154
Section 20(1) of the Act prohibits, namely a belated
reopening of the combination inquiry on the merits, or a
belated re-doing of the approval process through a
direction that requires a fresh notice and a fresh
competition assessment.
F.21. The controversy that falls for determination under Issue
(IV)
224. The controversy is not confined to the fact that the
show cause notice dated 04.06.2021 was issued after the
lapse of one year. The controversy is whether the
proceedings that followed, and the order dated 17.12.2021
which resulted from those proceedings, were in substance
an inquiry into the combination so as to attract the bar
contained in the proviso to Section 20(1) of the Act.
225. The proceedings culminated in directions which had
the direct effect of disturbing the finality of the approval
granted under Section 31(1) of the Act. In particular, the
order dated 17.12.2021 directed that the approval order
be kept in abeyance and required the filing of a fresh notice
in Form II. These directions necessarily contemplate a
fresh substantive review of the combination by the CCI.
The question is whether the CCI could, consistently with
the proviso to Section 20(1) of the Act, initiate and
conclude proceedings resulting in such directions after the
expiry of one year from the date the combination took
effect.
C.A. NO.4974 OF 2022 Page 117 of 154
F.22. Findings relevant to the application of the proviso to
Section 20(1) of the Act
226. The contemporaneous record shows that the CCI
passed an approval order under Section 31(1) of the Act
on 28.11.2019. It is also the appellant’s recorded case
before the NCLAT that the FRL SHA came into effect on
19.12.2019, and that FCPL received the subsc ription
amount on 26.12.2019, when the FCPL SHA also came
into effect. On either version urged on behalf of the
appellant before the NCLAT, the combination had taken
effect well before 04.06.2020. For the purposes of the
present issue, it is sufficient to hold that the show cause
notice dated 04.06.2021 was issued beyond one year of
the transaction having taken effect on the appellant’s own
recorded chronology. The proviso does not necessarily bar
penal proceedings for misstatements as such; it bars post-
facto steps whose operative effect is to reopen merger
review through measures such as approval abeyance and
compelled re-notification.
227. The show cause notice dated 04.06.2021 was
therefore issued beyond one year from the date on which
the combination had taken effect. The order dated
17.12.2021 was passed even later. The character of the
proceedings and the directions issued are equally
material. The order dated 17.12.2021 did not merely
impose monetary penalties. It proceeded to keep the
approval order in abeyance and directed the filing of a
fresh notice in Form II. Those directions do not operate in
C.A. NO.4974 OF 2022 Page 118 of 154
a vacuum. They are meaningful only if the CCI is to
reassess the combination afresh on the basis of the new
notice, which necessarily takes the matter back into the
domain of the combination inquiry and review
contemplated by Section 20(1) of the Act and Section 31 of
the Act.
F.23. Application of the proviso to Section 20(1) of the Act and
errors in the approach of the CCI and the NCLAT
228. Once it is found that the combination had taken
effect by December 2019, and that the show cause notice
dated 04.06.2021 was issued after the expiry of one year,
the CCI could not, consistently with the proviso to Section
20(1) of the Act, take steps which in substance reopened
the combination for a fresh competition review under the
guise of proceedings framed under other provisions.
229. The difficulty in the present case is that, although
the proceedings were styled as proceedings relating to the
notification and disclosure process, the final directions
issued in the order dated 17.12.2021 had the practical
effect of reopening the combination for a fresh substantive
review. A direction to keep an approval order in abeyance,
coupled with a direction to file a fresh notice in Form II, is
not a mere ancillary consequence of penal action. It is, in
substance, a step towards recommencing the combination
review process after the expiry of the statutory period.
That is precisely what the proviso to Section 20(1) of the
Act forbids.
C.A. NO.4974 OF 2022 Page 119 of 154
230. The respondents sought to meet this difficulty by
contending that the proceedings were not an inquiry
under Section 20(1) of the Act, but proceedings under
other provisions of the Act dealing with notification,
disclosure, and penalties. That submission, as a matter of
principle, can be accepted only to the limited extent that
the CCI is not barred from invoking distinct penal
provisions which operate independently of Section 20(1) of
the Act and which do not seek to reopen the competitive
merits of an implemented combination. However, once the
proceedings result in directions that necessarily require a
fresh competition review of the combination, the
proceedings cross the line from a penal inquiry into a
belated reopening of combination control on the merits. To
that extent, the proceedings are barred by the proviso to
Section 20(1) of the Act.
231. The CCI and the NCLAT also appear to have
proceeded on a premise that the CCI could, despite the
proviso to Section 20(1) of the Act, effectively place the
approval in a suspended state and require a fresh notice
so that the transaction could be examined afresh. That
approach is inconsistent with the statutory insistence on
finality after one year. The proviso to Section 20(1) of the
Act would have little content if, after one year, the CCI
could nonetheless achieve a fresh review of the very same
combination by issuing directions that require re -
notification and re-examination.
C.A. NO.4974 OF 2022 Page 120 of 154
232. It was also suggested that allegations of fraud or
concealment justify a reopening of the approval after one
year. The Act, however, contains specific provisions,
including Section 44 of the Act and Section 45 of the Act,
which address false statements and omissions. The
proviso to Section 20(1) of the Act does not create an
exception based on allegations of fraud, and it is not open
to introduce such an exception by implication, particularly
where the consequence would be to defeat a jurisdictional
bar enacted by Parliament. In any event, the availability of
penal provisions confirms that the statute has drawn a
clear line between penal consequences for misconduct and
the reopening of the competition merits of a consummated
combination after the stipulated period.
233. In this view, and without prejudice to the further
questions which arise under Issue (V) as to the existence
of a substantive power to keep an approval order in
abeyance or to require a fresh notice, the proviso to
Section 20(1) of the Act operates as an independent and
sufficient bar to any attempt to reopen the combination
review process after the expiry of one year from the date
the combination took effect. The directions issued in the
order dated 17.12.2021, to the extent that they sought to
disturb the approval and compel a fresh substantive
review of the combination, are therefore beyond
jurisdiction.
234. Issue (IV) is accordingly answered in favour of the
appellant. The proviso to Section 20(1) of the Act bars the
C.A. NO.4974 OF 2022 Page 121 of 154
CCI from initiating an inquiry under Section 20(1) of the
Act after one year from the date the combination has taken
effect. Having regard to the timing of the show cause notice
dated 04.06.2021 and the nature of the directions issued
by the order dated 17 .12.2021, the CCI lacked
jurisdiction, after the expiry of the statutory period, to
employ proceedings of this nature as a vehicle for
reopening the combination to fresh merits review,
including through approval abeyance and compelled re-
notification, including by keeping the approval order in
abeyance and requiring a fresh notice.
Issue (V): Whether the CCI possessed the statutory power to
keep the approval order dated 28.11.2019 in abeyance and
to direct the filing of a fresh notice in Form II, and whether
such power can be traced to the Act and the Combination
Regulations, including Section 45(2) of the Act, Regulation
5(5) of the Combination Regulations, and the condition
recorded in the approval order.
235. This issue concerns the source, and the limits, of the
CCI’s power after it has granted approval under Section
31(1) of the Act. By the order dated 17.12.2021, the CCI
did not merely impose penalties. It also directed that the
approval order dated 28.11.2019 be kept in abeyance and
required the filing of a fresh notice in Form II. The NCLAT
affirmed these directions. The question is whether the Act
or the Combination Regulations confer any such power,
and whether such a power can be supported either as a
residuary power under Section 45(2) of the Act, or by
reference to Regulation 5(5) of the Combination
C.A. NO.4974 OF 2022 Page 122 of 154
Regulations, or by reliance on a condition recorded in the
approval order itself.
F.24. The statutory structure does not contemplate
suspension or re-opening of an approval under Section 31(1) of
the Act, save in the manner expressly provided
236. The combination control framework under the Act is
designed as an ex ante mechanism. A notice is furnished
under Section 6(2) of the Act so that the CCI may assess,
prior to implementation, whether the proposed
combination causes or is likely to cause an appreciable
adverse effect on competition. That statutory design is
reflected in Section 31(1) of the Act, which provides that
where the CCI forms the opinion that a combination does
not, or is not likely to, have such an effect, it shall, by
order, approve that combination in respect of which a
notice has been given under Section 6(2) of the Act. The
statutory consequence of such an order is an approval of
the combination that was notified.
237. Two features of Section 31 are material. First,
Section 31(1) speaks in terms of approval of “that
combination” in respect of which notice has been given. It
does not contemplate an intermediate category of a
conditional or provisional approval that may later be kept
“in abeyance” at the CCI’s discretion. Secondly, the Act
itself incorporates time-bound finality in combination
review. Section 6(2A) provides the standstill rule. Further,
Section 31(11), as applicable during the relevant period,
provided for deemed approval where, after the stage
C.A. NO.4974 OF 2022 Page 123 of 154
contemplated by Section 29(2), the Commission did not
pass the requisite order or direction within the statutory
period. The scheme, therefore, contemplates terminal legal
outcomes within the statutory framework, and not an
extra-statutory category of an approval kept in suspended
animation.
238. In this scheme, the direction to keep an approval
under Section 31(1) of the Act in abeyance, and to require
a fresh notice in Form II so that the transaction is re-
examined, is not a procedural adjustment. It amounts, in
substance, to a power to suspend or re-open a concluded
approval. Such a power cannot be assumed merely
because the CCI is a regulator. It must be traceable to the
Act in express terms, or by necessary implication from its
structure. Section 31(1) of the Act, read with the wider
statutory framework of ex ante review, indicates the
contrary. It provides for approval as the terminal decision
on a notified combination, and it does not contemplate a
power to keep that approval in abeyance after it has been
granted and acted upon.
239. The absence of any statutory recognition of an
“approval in abeyance” is particularly significant once
Section 31(11) of the Act is kept in view. Where the law
itself contemplates deemed approval without any separate
order on expiry of the statutory timeline, it would be
incongruous to hold that the CCI nevertheless possesses
a general power to place an approval in abeyance, because
C.A. NO.4974 OF 2022 Page 124 of 154
such a power would, in principle, have to operate even in
cases of deemed approval where there is no order to
suspend. This provides further confirmation that the Act
proceeds on finality of approval within the statutory
framework, and does not confer a post-approval power of
suspension or re-notification.
F.25. Section 45(2) of the Act does not confer a power to keep
an approval order in abeyance or to compel a fresh Form II
notice after approval
240. The CCI and the NCLAT sought to locate the
impugned directions in the residuary language of Section
45(2) of the Act. That approach is legally untenable.
Section 45 of the Act is a penal provision dealing with
contraventions in relation to furnishing information.
Section 45(2) of the Act is expressly framed “without
prejudice” to Section 45(1) of the Act. Its function is to
supplement the penal and corrective framework that
operates in relation to the furnishing of information. It
cannot be read as an independent source of substantive
powers to revisit or suspend an approval granted under
Section 31(1) of the Act.
241. A provision that is located in a penalty section, and
that is intended to support the CCI’s dealing with
contraventions relating to furnishing of information,
cannot be used to create a power which effectively
nullifies, suspends, or re-opens a concluded approval
granted under a different chapter and under a self -
contained decision-making framework. If Section 45(2) of
C.A. NO.4974 OF 2022 Page 125 of 154
the Act were construed as conferring such a wide power,
it would convert a penal adjunct into a general power of
review over combination approvals, thereby re-writing the
statutory scheme.
242. Such an interpretation would also defeat the
structure of finality embodied in the Act. It would permit
the CCI to revisit approvals long after they have been
granted and acted upon, by styling the exercise as an
order “as it deems fit” under Section 45(2) of the Act. That
would enable precisely what the proviso to Section 20(1)
of the Act prohibits in substance, namely the belated re-
opening of combination scrutiny after the statutory period
has elapsed. The correct construction is that Section 45(2)
of the Act permits only such ancillary or consequential
directions as are necessary to give effect to the CCI’s
dealing with contraventions relating to information, within
the statutory field in which Section 45 of the Act operates.
It cannot be expanded to support a power to keep an
earlier Section 31(1) of the Act approval in abeyance or to
require a fresh Form II filing for a combination already
reviewed and approved.
243. The position is further reinforced by the scheme of
the Act which separately provides for penalties and
consequences for distinct defaults, including those under
Section 43A of the Act, Section 44 of the Act and Section
45 of the Act. Where the legislature has provided specific
consequences for false statements or omissions in the
combination process, it is not open to transform Section
C.A. NO.4974 OF 2022 Page 126 of 154
45(2) of the Act into a substitute for a review or suspension
power which the combination provisions do not confer.
F.26. Regulation 5(5) of the Combination Regulations cannot
confer, and does not supply, a power to suspend an approval or
require a fresh Form II filing after approval
244. The CCI and the NCLAT also relied on the scheme of
Regulation 5(5) of the Combination Regulations to support
the direction to file a fresh notice in Form II. That reliance
is misconceived.
245. The Combination Regulations are subordinate
legislation. They operate within the confines of the Act and
cannot create substantive powers that the parent statute
does not confer. Even if Regulation 5(5) of the Combination
Regulations is understood as part of the procedural
machinery governing the filing and scrutiny of notices, it
cannot be interpreted as authorising the CCI to suspend
or keep in abeyance an approval already granted under
Section 31(1) of the Act, nor can it be treated as an
independent source of a power to compel a fresh notice for
a consummated and approved combination.
246. A direction to file Form II is part of the information-
gathering and assessment apparatus of ex ante review.
The CCI may, in an appropriate case and within the review
process, require a notifying party to furnish further
information or to furnish information in the format
contemplated by Form II if the statutory and regulatory
conditions for such filing are attracted. However, once the
CCI has concluded its review and granted approval under
C.A. NO.4974 OF 2022 Page 127 of 154
Section 31(1) of the Act, the notice process is exhausted.
Regulation 5(5) of the Combination Regulations cannot be
pressed into service to revive a concluded review by
mandating a fresh Form II filing for the same combination.
247. Any construction of Regulation 5(5) of the
Combination Regulations that authorises post-approval
re-notification would not only be ultra vires the Act, but
would also undermine the finality and certainty that the
statutory scheme seeks to secure. Such an interpretation
would allow the procedural regulation to enlarge the CCI’s
jurisdiction beyond the limits imposed by the parent
statute, including the limitation contained in the proviso
to Section 20(1) of the Act.
F.27. The condition recorded in the approval order cannot
create a power to keep the approval in abeyance or to compel
re-notification
248. It was also suggested that the condition recorded in
the approval order itself supports the CCI’s later decision
to keep the approval in abeyance and require a fresh
notice. This contention cannot be accepted. An approval
order under Section 31(1) of the A ct is a statutory
determination. A condition recorded in such an order
cannot enlarge the CCI’s jurisdiction beyond what the Act
authorises. A statutory authority cannot, by inserting a
condition or reservation, confer upon itself a power which
Parliament has not granted. If the Act does not confer a
power of suspension or review of an approval, that
deficiency cannot be cured by drafting. The validity and
C.A. NO.4974 OF 2022 Page 128 of 154
enforceability of any condition must be tested against the
statute. A condition cannot be a substitute for statutory
power.
249. At the highest, such a condition can clarify that the
approval proceeds on the correctness of the information
furnished and that statutory consequences may follow if
the Act so permits. But a recital in an approval order
cannot, by its own force, enlarge the Commission’s
jurisdiction beyond the statute. Even if paragraph 16
states that the approval shall stand revoked if the
information provided is found to be incorrect, that recital
cannot be read as creating an independent statutory
power to keep the approval in abeyance, compel a fresh
Form II filing, or reopen merger review contrary to the
structure and limitations of the Act.
250. It is settled that a power of review is not inherent and
must be conferred by statute, either expressly or by
necessary implication. In the absence of such conferment,
an authority cannot revisit a concluded decision on merits
merely because it later prefers a different view. The
respondent side relies on broad “fraud vitiates”
formulations and on reference to Section 21A of the Act to
imply a recall or rescission power. Even assuming that a
narrow recall power may exist in some statutory settings,
it cannot be exercised to (i) bypass the time-bound finality
embedded in the combination regime, or (ii) collapse the
Act’s careful separation between penal consequences
(Sections 44/45) and merits re -examination of a
C.A. NO.4974 OF 2022 Page 129 of 154
consummated combination. In the present record, the
Approval Order itself demonstrates retail -market
assessment and FRL-linked findings, undermining the
factual premise that the Commission was disabled from
reviewing the retail dimension at the ex ante stage. Even
if a narrow recall power exists in cases of proved fraud, it
cannot be exercised to override the Act’s time-bound
finality and to compel a fresh merger review after the bar
contained in the proviso to Section 20(1) has come into
operation. And, in any event, it cannot be used when the
statutory ingredients of Sections 44/45 are not
established on a reasoned finding.
F.28. Errors in the reasoning of the CCI and the NCLAT, and
the respondents’ contentions
251. The CCI and the NCLAT proceeded on the
assumption that the power to approve a combination
necessarily includes a power to annul, revoke, or keep the
approval in abeyance if the regulator later forms the view
that the approval was obtained on an incorrect factual
premise. That reasoning is contrary to settled principles of
statutory interpretation and administrative law. A power
to decide in the first instance does not automatically carry
with it a power to revisit or suspend the decision after it
has been made, unless the statute so provides.
252. The submission that the greater power to revoke
includes the lesser power to keep an approval in abeyance
begs the prior question: where, under the Act, is any power
to revoke an approval under Section 31(1) of the Act
C.A. NO.4974 OF 2022 Page 130 of 154
conferred at all? In a statute which provides for approval
(including deemed approval) and separately provides for
penal consequences for misstatements, a revocation or
suspension power cannot be assumed by analogy.
253. It was further urged that allegations of fraud or
misrepresentation justify such a re -opening. Even
assuming that a finding of fraud may have serious
consequences, the question under this issue is one of
jurisdiction. Allegations of fraud do not create statutory
power where none exists. The Act provides specific penal
mechanisms to address false statements, omissions, and
suppression, including Section 44 of the Act and Section
45 of the Act, each with its own ingredients. Those
provisions cannot be converted into a source of authority
to suspend or re-open a concluded approval under Section
31(1) of the Act.
254. The respondents’ approach, if accepted, would result
in the CCI possessing an open-ended power to unsettle
concluded approvals whenever it later takes a different
view of the material placed before it. That would
undermine the predictability and certainty that is
essential to the combination control regime. It would also
permit an evasion of the limitation contained in the
proviso to Section 20(1) of the Act, by allowing the CCI to
achieve indirectly, through a fresh Form II direction, what
it cannot do directly through a belated inquiry into a
consummated combination.
C.A. NO.4974 OF 2022 Page 131 of 154
255. It was also urged, as an ancillary contention, that
recourse could have been taken by reference to Section
21A of the Act or through inter-agency consultation. For
the purposes of the present appeal, it is sufficient to
observe that no such statutory route forms the basis of the
CCI’s impugned directions. A statutory authority must
stand or fall by the reasons it records, and cannot seek to
sustain jurisdiction or consequences by introducing at the
appellate stage an altogether new statutory foundation not
reflected in the impugned order.
256. As already discussed while answering Issue (IV), the
show cause notice dated 04.06.2021 and the eventual
order dated 17.12.2021 were issued well beyond one year
from the date the combination took effect. Even apart from
the absence of substantive power to suspend an approval,
the statutory bar on initiating an inquiry under Section
20(1) of the Act after one year underscores the
impermissibility of directions whose practical effect is to
re-open the competition review of an implemented
combination after the statutory period.
257. For these reasons, Issue (V) is answered in favour of
the appellant. The CCI did not possess statutory power to
keep the approval order dated 28.11.2019 in abeyance or
to direct the filing of a fresh notice in Form II in respect of
the same approved and implemented transaction. No such
power can be traced to Section 45(2) of the Act. No such
power can be sourced in Regulation 5(5) of the
Combination Regulations, which in any event cannot
C.A. NO.4974 OF 2022 Page 132 of 154
enlarge the CCI’s jurisdiction beyond the Act. Nor can
such power be created or sustained by reliance on a
condition recorded in the approval order itself. The
contrary view taken by the CCI and affirmed by the NCLAT
cannot be sustained.
Issue (VI): Whether the impugned proceedings are vitiated
for breach of principles of natural justice, including
whether the final findings and directions travelled beyond
the show cause notice dated 04.06.2021 and whether the
appellant was denied a fair opportunity to meet the case
against it.
258. This issue concerns procedural fairness in a
statutory process which culminated in serious civil
consequences, including adverse findings of suppression
and misrepresentation, imposition of penalties, and
directions affecting the efficacy of an approval granted
under Section 31(1) of the Act. Even where the regulator
is entrusted with wide responsibilities, the legitimacy of its
adjudicatory conclusions depends upon adherence to the
minimum requirements of natural justice. These
requirements include fair notice of the case to be met,
disclosure of the material to be relied upon, and a real
opportunity to answer that case before adverse findings
and consequences are imposed.
F.29. What the principles of natural justice require in
proceedings of this nature
259. The foundational requirement is that the person
proceeded against must know, with reasonable clarity, the
precise case that is being set up. Where proceedings are
C.A. NO.4974 OF 2022 Page 133 of 154
initiated through a show cause notice, the notice must
disclose, in substance, the allegations which are proposed
to be examined, the material basis on which those
allegations rest, and the consequences that may follow if
the allegations are established. This requirement is not
satisfied by vague or general references. It is satisfied only
where the notice, read fairly, enables the noticee to
understand what it must answer.
260. Natural justice also requires that adverse findings
should not be founded on material that was not put to the
affected party in a manner that permits a meaningful
response. If the authority proposes to rely on documents,
internal communications, or other materials which form
the basis of the alleged suppression or misrepresentation,
the party must be given a fair chance to explain those
materials in their proper context. Where the authority’s
final reasoning shifts from the premise in the show cause
notice to a materially different factual and legal basis,
fairness ordinarily requires a supplemental notice and a
reasonable opportunity to meet the new case.
261. A further aspect of fairness is that the authority must
not impose consequences that were never put in issue.
Where the final order contains directions of a kind that the
party had no reason to anticipate from the notice, the
opportunity to be heard becomes illusory in relation to
those directions. This is particularly so where the
directions are not merely incidental procedural steps, but
C.A. NO.4974 OF 2022 Page 134 of 154
operate as substantive measures affecting legal rights and
settled positions.
F.30. The controversy under Issue (VI)
262. The controversy is whether the show cause notice
dated 04.06.2021, and the procedure adopted thereafter,
afforded a fair and adequate opportunity to the appellant,
having regard to the manner in which the CCI ultimately
decided the matter. This includes two linked questions.
263. The first question is whether the CCI’s final
conclusions, including the basis on which findings of
suppression and misrepresentation were recorded and the
nature of the consequential directions issued, travelled
beyond the case set out in the show cause notice dated
04.06.2021.
264. The mismatch may be stated shortly. The show cause
notice put in issue the asserted non -notification or
defective disclosure in respect of FRL -linked
arrangements, including why the FRL SHA was not
notified, and framed that case through alleged
contradictions and disclosure defaults. The final order,
however, went further in both evidentiary reliance and
consequence. It kept the approval order in abeyance,
compelled a fresh Form II filing, and rested decisive
conclusions on internal documents that assumed a
sharper and more central role in the final reasoning than
was clearly foreshadowed at the notice stage. The latter
course, especially the directions concerning approval
C.A. NO.4974 OF 2022 Page 135 of 154
abeyance and Form II re-filing, required explicit notice
because they raised distinct questions of power,
limitation, and prejudice.
265. This Court has repeatedly emphasised that in penal
or punitive proceedings, the show cause notice is the
foundation of the adjudicatory exercise. The notice must
clearly set out the precise allegations and the proposed
basis for action so that the noticee has a real and effective
opportunity to respond. Where the notice is vague, or
where material grounds are not put to the noticee, the
opportunity to meet the case becomes illusory. The
following portions from Gorkha Security Services v.
Govt. (NCT of Delhi)
26 echo the same principles:
“16. It is a common case of the parties that the
blacklisting has to be preceded by a show -cause
notice. Law in this regard is firmly grounded and does
not even demand much amplification. The necessity of
compliance with the principles of natural justice by
giving the opportunity to the person against whom
action of blacklisting is sought to be taken has a valid
and solid rationale behind it. With blacklisting, many
civil and/or evil consequences follow. It is described as
“civil death” of a person who is foisted with the order
of blacklisting. Such an order is stigmatic in nature and
debars such a person from participating in government
tenders which means precluding him from the award
of government contracts.
17. Way back in the year 1975, this Court in Erusian
Equipment & Chemicals Ltd. v. State of W.B. [Erusian
Equipment & Chemicals Ltd. v. State of W.B., (1975) 1
SCC 70] , highlighted the necessity of giving an
opportunity to such a person by serving a show-cause
notice thereby giving him opportunity to meet the
allegations which were in the mind of the authority
contemplating blacklisting of such a person. This is
26
(2014) 9 SCC 105
C.A. NO.4974 OF 2022 Page 136 of 154
clear from the reading of paras 12 and 20 of the said
judgment. Necessitating this requirement, the Court
observed thus: (SCC pp. 74-75)
“12. Under Article 298 of the Constitution the executive
power of the Union and the State shall extend to the
carrying on of any trade and to the acquisition, holding
and disposal of property and the making of contracts
for any purpose. The State can carry on executive
function by making a law or without making a law. The
exercise of such powers and functions in trade by the
State is subject to Part III of the Constitution. Article 14
speaks of equality before the law and equal protection
of the laws. Equality of opportunity should apply to
matters of public contracts. The State has the right to
trade. The State has there the duty to observe equality.
An ordinary individual can choose not to deal with any
person. The Government cannot choose to exclude
persons by discrimination. The order of blacklisting
has the effect of depriving a person of equality of
opportunity in the matter of public contract. A person
who is on the approved list is unable to enter into
advantageous relations with the Government because
of the order of blacklisting. A person who has been
dealing with the Government in the matter of sale and
purchase of materials has a legitimate interest or
expectation. When the State acts to the prejudice of a
person it has to be supported by legality.
***
20. Blacklisting has the effect of preventing a person
from the privilege and advantage of entering into
lawful relationship with the Government for purposes
of gains. The fact that a disability is created by the
order of blacklisting indicates that the relevant
authority is to have an objective satisfaction.
Fundamentals of fair play require that the person
concerned should be given an opportunity to represent
his case before he is put on the blacklist.”
………………………………………………
20. Thus, there is no dispute about the requirement of
serving show-cause notice. We may also hasten to add
that once the show -cause notice is given and
opportunity to reply to the show-cause notice is
afforded, it is not even necessary to give an oral
hearing. The High Court has rightly repudiated the
appellant's attempt in finding foul with the impugned
order on this ground. Such a contention was
C.A. NO.4974 OF 2022 Page 137 of 154
specifically repelled in Patel Engg. [Patel Engg. Ltd. v.
Union of India, (2012) 11 SCC 257 : (2013) 1 SCC (Civ)
445]
21. The central issue, however, pertains to the
requirement of stating the action which is proposed to
be taken. The fundamental purpose behind the serving
of show-cause notice is to make the noticee understand
the precise case set up against him which he has to
meet. This would require the statement of imputations
detailing out the alleged breaches and defaults he has
committed, so that he gets an opportunity to rebut the
same. Another requirement, according to us, is the
nature of action which is proposed to be taken for such
a breach. That should also be stated so that the noticee
is able to point out that proposed action is not
warranted in the given case, even if the
defaults/breaches complained of are not satisfactorily
explained. When it comes to blac klisting, this
requirement becomes all the more imperative, having
regard to the fact that it is harshest possible action.”
Though the context in Gorkha Security Services (Supra)
was blacklisting, the governing principle, fair notice of
both the allegations and the proposed adverse action, is of
general application in punitive administrative
proceedings, and applies with equal force where serious
civil and penal consequences are contemplated under the
Act.
F.31. Findings on the scope of the show cause notice and the
course of the proceedings
266. The show cause notice dated 04.06.2021 initiated
proceedings on a defined footing. It called upon the
appellant to explain, inter alia, why the FRL SHA was not
notified to the CCI. The notice was thus centred on a
C.A. NO.4974 OF 2022 Page 138 of 154
particular asserted deficiency in notification and
disclosure.
267. The final order, however, proceeded on a wider and
sharper plane. While the broad themes of the show cause
notice did concern purpose, relationship between the
agreements, and nature of rights over FRL, the final
reasoning rested substantially on internal documents and
communications, including earlier-period materials, as
furnishing the decisive basis for findings of suppression
and misrepresentation. In a matter of this nature, where
such internal materials were to assume central
significance, fairness required procedural clarity and
adequate opportunity directed specifically to their use and
to the consequences proposed to be founded upon them.
268. The final order also issued directions of a character
that were not fairly foreshadowed by the show cause
notice. In particular, the show cause notice did not put the
appellant on notice that the CCI proposed to keep the
approval order under Section 31(1) of the Act in abeyance,
or that it proposed to require a fresh notice in Form II in
respect of a transaction that had already been approved
and consummated. Those directions were not merely
ancillary to the allegations as framed. They constituted
substantive measures which the appellant was entitled to
meet by focused submissions on power, jurisdiction, and
prejudice.
269. The procedural course also demonstrates that third
party participation and belated introduction of material
C.A. NO.4974 OF 2022 Page 139 of 154
played a role in the manner and pace with which the
proceedings were taken to their conclusion. The
proceedings were influenced by requests made after the
show cause notice stage for access, inspection, and
participation. The record indicates that the timeline for the
proceeding was altered and compressed by external
developments, and the process ultimately moved to a final
order under a shortened schedule. In a matter of this
complexity and consequence, fairness required that the
appellant have adequate time and a clear opportunity to
respond to any expanded factual basis and any new
proposed directions.
270. The combined effect of these features is that the
appellant was ultimately visited with findings and
directions that rested on a materially sharpened case,
without the benefit of a correspondingly clear
supplemental notice defining the expanded factual
reliance and the consequential powers proposed to be
exercised.
271. The respondents also urged that the appellant
misrepresented the scope of the approval order before
other fora, and that an arbitral tribunal made
observations on the approval order without the CCI being
a party, raising a submission based on the character of
approvals as operating in rem. Reliance was placed on
Vidya Drolia v. Durga Trading Corporation (Supra) to
submit that disputes in rem are non-arbitrable.
C.A. NO.4974 OF 2022 Page 140 of 154
272. These submissions do not determine the legality of
the impugned action under the Act. The validity of the
CCI’s penal findings and consequential directions must be
tested on the statutory ingredients, the contemporaneous
record of the Section 6(2) of the Act review, and the
requirements of fair notice and hearing in the proceedings
initiated by the show cause notice dated 04.06.2021.
273. In any event, even assuming that positions taken
before other fora are relied upon to suggest a broader
narrative, they cannot enlarge statutory power or cure
breach of natural justice. A statutory authority must
sustain its adverse findings and directions on the case put
in the show cause notice and on reasons recorded in its
own order. The present proceedings cannot be justified by
collateral controversies or by characterisation of the
approval order in other proceedings, when the show cause
notice itself did not set out, with the required specificity,
the expanded factual and consequential case on which the
final order ultimately proceeded.
F.32. Errors in the approach of the CCI and the NCLAT
274. The CCI and the NCLAT treated the proceedings as
procedurally sound on the basis that the appellant had
been heard and had filed responses. That approach does
not answer the real question. The test is not whether a
hearing in some form was afforded. The test is whether the
hearing was meaningful in relation to the case that
C.A. NO.4974 OF 2022 Page 141 of 154
ultimately formed the basis of the adverse findings and
directions.
275. Where the show cause notice proceeded on broad
themes and the final order came to rest decisively on
internal communications and on consequential directions
of approval abeyance and compelled Form II filing, the
proceeding required greater procedural clarity than what
is disclosed by the record. The absence of a focused
supplemental opportunity in relation to those aspects
meant that the appellant was not fairly put on notice of
the full weight and consequence of the case it ultimately
had to meet.
276. The respondents sought to sustain the process by
contending that the CCI is not bound by the
characterisation adopted by the notifying party, and that
it is entitled to examine the transaction in substance. That
proposition, stated at a general level, is unobjectionable.
It does not, however, answer the objection of procedural
fairness. The entitlement to examine substance does not
dilute the duty to give fair notice of the allegations and the
material on which adverse findings will be recorded. The
more the authority seeks to move from the narrow premise
of the notice to a broader theory of suppression or fraud,
the greater is the need for specificity and clarity in notice.
277. The respondents also sought to justify the
consequential directions as merely flowing from the
alleged contraventions. That submission cannot be
accepted. A direction that affects the operative status of
C.A. NO.4974 OF 2022 Page 142 of 154
an approval granted under Section 31(1) of the Act, and
a direction requiring a fresh Form II filing in relation to a
consummated transaction, raise distinct questions of
power, jurisdiction, and statutory design. Fairness
required that these proposed directions be clearly
disclosed as part of the case to be met, so that the
appellant could address them directly and fully.
278. The NCLAT’s endorsement of the CCI’s approach
does not cure these defects. An appellate forum may affirm
or reverse a decision on the materials properly on record,
but it cannot retrospectively supply the notice and
opportunity that natural justice requires at the stage when
the first-instance authority forms adverse findings of fact
and imposes serious consequences.
279. Reference can be made to Kapra Mazdoor Ekta
Union v. Birla Cotton Spg. and Wvg. Mills Ltd.
27, in the
following portion:
“19. Applying these principles it is apparent that where
a court or quasi-judicial authority having jurisdiction to
adjudicate on merit proceeds to do so, its judgment or
order can be reviewed on merit only if the court or the
quasi-judicial authority is vested with power of review
by express provision or by necessary implication. The
procedural review belongs to a different category. In
such a review, the court or quasi-judicial authority
having jurisdiction to adjudicate proceeds to do so, but
in doing so commits (sic ascertains whether it has
committed) a procedural illegality which goes to the
root of the matter and invalidates the proceeding itself,
and consequently the order passed therein. Cases
where a decision is rendered by the court or quasi-
judicial authority without notice to the opposite party
or under a mistaken impression that the notice had
27
(2005) 13 SCC 777
C.A. NO.4974 OF 2022 Page 143 of 154
been served upon the opposite party, or where a matter
is taken up for hearing and decision on a date other
than the date fixed for its hearing, are some illustrative
cases in which the power of procedural review may be
invoked. In such a case the party seeking review or
recall of the order does not have to substantiate the
ground that the order passed suffers from an error
apparent on the face of the record or any other ground
which may justify a review. He has to establish that
the procedure followed by the court or the quasi-
judicial authority suffered from such illegality that it
vitiated the proceeding and invalidated the order made
therein, inasmuch as the opposite party concerned was
not heard for no fault of his, or that the matter was
heard and decided on a date other than the one fixed
for hearing of the matter which he could not attend for
no fault of his. In such cases, therefore, the matter has
to be reheard in accordance with law without going into
the merit of the order passed. The order passed is
liable to be recalled and reviewed not because it is
found to be erroneous, but because it was passed in a
proceeding which was itself vitiated by an error of
procedure or mistake which went to the root of the
matter and invalidated the entire proceeding. In
Grindlays Bank Ltd. v. Central Govt. Industrial
Tribunal [1980 Supp SCC 420 : 1981 SCC (L&S) 309]
it was held that once it is established that the
respondents were prevented from appearing at the
hearing due to sufficient cause, it followed that the
matter must be reheard and decided again.”
280. In view of the above, the impugned proceedings are
vitiated for breach of principles of natural justice. The final
findings and consequential directions rested, to a material
extent, on a case whose evidentiary emphasis and
proposed consequences were mater ially sharper than
what the show cause notice had clearly put the appellant
on notice to meet. In particular, the directions concerning
approval abeyance and compelled re-notification were not
preceded by the kind of focused notice and opportunity
that principles of natural justice required in a proceeding
C.A. NO.4974 OF 2022 Page 144 of 154
of this gravity. Issue (VI) is, therefore, answered in favour
of the appellant.
G. Synthesis of Conclusions on Issue (I) to Issue (VI)
281. When we consider the findings above together, the
central basis of the impugned action cannot be accepted.
The CCI proceeded on the footing that the appellant had,
in substance, failed to notify the complete combination.
However, Section 6(2) of the Act read with Regulation 9(4)
and Regulation 9(5) of the Combination Regulations is
concerned with whether the CCI was given a complete
picture of the inter-connected transaction at the stage of
ex ante review. As already discussed, the
contemporaneous regulatory record shows that the CCI
had before it the executed agreements and the connected
arrangements as part of the same Form I filing and review.
It was on that record that the CCI undertook scrutiny and
granted approval under Section 31(1) of the Act. In these
circumstances, a later and more formal view of how the
same material ought to have been described cannot
convert an approved filing into a case of non-notification
or suppression in substance.
282. This has direct consequences for the penalties and
adverse findings. This remains so even after taking due
account of the internal communications relied upon by the
Commission, which, though relevant, do not displace the
legal significance of the executed agreements and the
contemporaneous review record. The conditions for
C.A. NO.4974 OF 2022 Page 145 of 154
invoking Section 43A of the Act, Section 44 of the Act and
Section 45 of the Act are not satisfied merely because, at
a later point, the CCI prefers a different description or
analytical framing of documents that were already on
record. Section 43A of the Act is attracted only where the
statutory defaults specified in it are established. Section
44 of the Act and Section 45 of the Act require strict
satisfaction of their ingredients, including materiality and
the mental element prescribed. As already analysed, the
impugned approach treated differences of
characterisation, and the non-furnishing of internal
materials without a clear demonstration of statutory
requirement and materiality, as sufficient to impose penal
consequences. That approach cannot be sustained, and
the findings and penalties resting on it must fail.
283. Further, the Act does not contemplate an “approval
in abeyance” after approval has been granted under
Section 31(1) of the Act, nor does it confer a power to
compel a fresh Form II notice for the same approved and
implemented transaction. Such directions lack a statutory
basis and, in substance, reopen concluded combination
scrutiny contrary to the jurisdictional limit contained in
the proviso to Section 20(1) of the Act. In any event, the
impugned proceedings are also vitiated on grounds of
natural justice, since the final findings and consequential
directions travelled beyond the show cause notice dated
04.06.2021 without the appellant having a fair
opportunity to meet that expanded case.
C.A. NO.4974 OF 2022 Page 146 of 154
284. Certain submissions were advanced to suggest that
the transaction structure also raised issues relating to
compliance with the foreign direct investment regime and
that, had fuller disclosure been made, inter-agency inputs
could have been sought. These contentions do not supply
jurisdiction or power which the Act does not confer. The
present appeal concerns the legality of action taken under
Sections 43A, 44 and 45 of the Act and the statutory limits
on post-approval measures under the combination
framework. Questions of compliance with other regulatory
regimes, if any, lie in their own statutory domain and
cannot be used to enlarge the CCI’s powers to suspend an
approval or compel re-notification where the Act and the
Combination Regulations do not confer such authority.
285. For all these reasons taken together, the order dated
17.12.2021 and the judgment of the NCLAT affirming it
cannot be sustained, and the appeal is liable to be allowed,
with consequential operative directions to follow.
H. Role of the regulator and standards of fair regulatory
conduct
286. At this juncture, we believe it is necessary to
emphasise the role of the regulator and the standards of
fair regulatory conduct that must guide the exercise of
power under the Competition Act, 2002 (hereinafter
referred to as “the Act”). Combination control is a form of
economic regulation that carries immediate commercial
consequences. The CCI is entrusted with specialised
functions, including the ex ante assessment contemplated
C.A. NO.4974 OF 2022 Page 147 of 154
by Section 6(2) of the Act and the determination under
Section 31(1) of the Act. At the same time, the CCI’s
authority is statutory. Its actions must therefore satisfy
the minimum standards of legality, fairness, and reasoned
decision-making that apply to all public authorities. These
standards are not technicalities. They are the basis on
which regulatory legitimacy is maintained, compliance is
encouraged, and market participants can plan their affairs
with confidence.
H.1. The statutory purpose: the Act promotes as well as
protects
287. The preamble of the Act sets out the statute’s
orientation in clear terms. The Act is enacted, keeping in
view the economic development of the country, to prevent
practices having adverse effect on competition, to promote
and sustain competition, to protect the interests of
consumers, and to ensure freedom of trade carried on by
other participants in markets in India. The Act is therefore
not designed as a purely punitive instrument. It is equally
intended to sustain competitive market structures
through a stable and credible regulatory framework.
288. This dual objective has a direct bearing on regulatory
conduct. A regulator that focuses only on punitive
outcomes, without corresponding attention to
predictability, procedural fairness, and proportionality,
risks undermining the “promote and sustain” dimension
of the statute. Conversely, a regulator that is unwilling to
enforce the law against conduct that genuinely harms
C.A. NO.4974 OF 2022 Page 148 of 154
competition risks undermining consumer welfare and
market integrity. The statutory balance is achieved only
when regulatory power is exercised firmly, but within law,
and through processes that are fair, transparent, and
proportionate to the statutory purpose.
H.2. Principles that must guide a regulator exercising statutory
power
289. There are certain settled principles which a
regulator, entrusted with statutory powers and affecting
rights and commercial outcomes, must observe while
acting under the Act.
290. First, the regulator must act within the four corners
of the statute. Regulatory expertise does not enlarge
jurisdiction. The CCI’s authority, whether to initiate
proceedings, impose penalties, or issue consequential
directions, must be traceable to the Ac t and the
Combination Regulations. A course of action that appears
desirable from a regulatory standpoint cannot substitute
for statutory power.
291. Second, procedural fairness is integral to lawful
regulation, especially where adverse civil consequences
follow. Fair notice of the case to be met, disclosure of the
material to be relied upon, and a meaningful opportunity
to respond are not dispensable. As noted in Gorkha
Security Services v. Govt. (NCT of Delhi) (supra), when
proceedings are initiated through a show cause notice, the
notice must convey, with reasonable clarity, the
allegations and the consequences proposed so that the
C.A. NO.4974 OF 2022 Page 149 of 154
noticee can answer them effectively. Where the final
decision rests on a materially different factual or legal
basis from what was put in issue, fairness ordinarily
requires an appropriate supplemental opportunity.
292. Third, reasoned decision-making is a safeguard
against arbitrariness. Regulatory conclusions must be
supported by reasons demonstrating application of mind
to the statutory ingredients, the relevant record, and the
submissions made. This requirement assumes particular
importance where penal provisions are invoked, as held by
this Court in Siemens Engineering & Mfg. Co. of India
Ltd. v. Union of India
28.
293. Fourth, proportionality and restraint are essential to
fair economic regulation. Penalties, particularly those that
are substantial, cannot rest on hindsight -driven
disagreement with drafting or emphasis. They must follow
only when the statute’s ingredients are clearly established.
Deterrence is a legitimate objective, but deterrence
operates within legality and proportionality, and the same
has been reiterated by this Court in Excel Crop Care Ltd.
v. Competition Commission of India
29.
H.3. Regulatory certainty, equal treatment, and confidence in
the legal system
294. Economic regulation operates not only through
prohibitions and penalties, but also through certainty and
predictability. A combination regime is designed to
28
(1976) 2 SCC 981
29
(2017) 8 SCC 47
C.A. NO.4974 OF 2022 Page 150 of 154
encourage parties to come forward, disclose, and submit
proposed transactions for ex ante review. That cooperative
architecture functions effectively only if the process is
stable, time-bound, and administered with fairness. If
approvals remain indefinitely exposed to reopening
through methods not clearly anchored to statutory power,
regulatory certainty is weakened and incentives for early,
voluntary engagement with the regulator are diminished.
295. This has an important constitutional and
institutional dimension. The guarantee of equality before
law extends to all persons. The discipline against arbitrary
administrative action applies irrespective of whether the
participant is domestic or foreign. A predictable and rule-
bound regulatory environment strengthens confidence in
the legal system and fosters compliance. It also ensures
that domestic market participants do not gain from unfair
practices merely because another participant is foreign or
because the transaction has a cross-border dimension.
H.4. Foreign investment, global economic realities, and the
Act’s promote function
296. The importance of a stable and fair regulatory
framework is heightened in the present global economic
climate. In an era where trade and investment flows are
often influenced by tariffs, counter-tariffs, supply-chain
realignments, and heightened geopolitical and market
uncertainty, jurisdictions are increasingly assessed by the
credibility of their institutions and the predictability of
their regulatory systems. Where external conditions
C.A. NO.4974 OF 2022 Page 151 of 154
introduce uncertainty, domestic institutions must not add
to it. A regulator that acts within law, with fairness and
reasoned consistency, reduces the risk premium
associated with investment and strengthens market
confidence.
297. Foreign investment, in this sense, is not an
extraneous concern. It is one of the channels through
which capital, technology, managerial expertise, and
efficiencies enter markets. A fair and rule -bound
regulatory environment therefore serves the national
interest. It protects domestic markets from anti -
competitive harm, protects consumers, and assures
investors, foreign and domestic, that outcomes will turn
on law and evidence rather than on ad hoc approaches. In
Vodafone International Holdings B.V. v. Unio n of
India
30, this Court emphasised that certainty and
stability in the legal regime are essential for business
decisions, particularly in cross-border investment
contexts.
298. Equally, the point must be understood correctly. Fair
treatment of foreign investors does not mean special
treatment. It means equal treatment under the same law,
administered through the same procedural safeguards
and disciplined reasoning. Protecting the domestic market
does not mean protecting domestic players. It means
protecting the competitive process and consumer welfare,
30
(2012) 6 SCC 613
C.A. NO.4974 OF 2022 Page 152 of 154
and ensuring that no participant, domestic or foreign, can
distort competition through unfair practices.
299. Economic thought has long recognised that wider
markets can support greater specialisation, improved
efficiencies, and stronger competitive pressure. Adam
Smith’s well-known observation in An Inquiry into the
Nature and Causes of the Wealth of Nations (Book I,
Chapter III), that “the division of labour is limited by the
extent of the market”, captures the basic point that
broader markets can sustain more specialised activity and
deeper rivalry. Amartya Sen has also reminded us that
global economic integration is neither new nor inherently
one-sided, and that the central question is whether its
gains are shared in a fair and inclusive manner. These
ideas are relevant in the present context. When cross-
border investment and trade are shaped by tariffs,
counter-tariffs, and supply-chain realignments, a
predictable and fair regulatory system reduces
uncertainty and supports competition through entry,
scale, and innovation. A legal framework that encourages
transparent participation and fair, time-bound review,
rather than uncertainty or retrospectively unsettled
approvals, therefore aligns more closely with the statutory
objective to promote and sustain competition, while
retaining full authority to protect competition where the
law is truly contravened.
300. When viewed from this perspective, the standards of
fair regulatory conduct are not merely procedural ideals.
C.A. NO.4974 OF 2022 Page 153 of 154
They are instrumental to the Act’s design. They ensure
that enforcement protects competition without
undermining market confidence, and that promotion of
competition is not compromised by unpredictability or
form-driven approaches that do not serve the statutory
purpose.
301. For these reasons, consistent with the findings
already recorded above, robust regulation under the Act
must remain law-governed regulation. The letter of the
law, read purposively within the statute’s design, is
paramount. That is the foundation on which consumer
interest is advanced, domestic competition is sustained,
and India remains a credible jurisdiction for lawful
investment and enterprise in an increasingly contested
global economic environment.
302. Before parting, we place on record our appreciation
for the assistance rendered by learned senior counsel Mr.
Gopal Subramanium and learned Additional Solicitor
General Mr. N. Venkataraman. Both learned counsel
argued the matter with fairness and balance, and assisted
the Court as true officers of the Court.
I. Conclusion
303. In view of the findings recorded above, the appeal is
allowed.
304. The impugned judgment dated 13.06.2022 passed by
the NCLAT and the order dated 17.12.2021 passed by the
CCI are set aside.
C.A. NO.4974 OF 2022 Page 154 of 154
305. If any amount has been deposited or recovered from
the appellant pursuant to the impugned order(s), the same
shall be refunded to the appellant within a period of eight
weeks from today, together with simple interest at the rate
of 6% per annum from the date(s) of deposit/recovery until
the date of actual refund. In the event the refund is not
made within the aforesaid period of eight weeks, the
amount remaining unpaid shall carry simple interest at
the rate of 9% per annum from the expiry of eight weeks
until the date of payment.
306. All pending applications, if any, stand disposed of in
the above terms.
307. There shall be no order as to costs.
………………………….J.
[VIKRAM NATH]
………………………….J.
[SANDEEP MEHTA]
NEW DELHI;
MAY 27, 2026
Legal Notes
Add a Note....